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[House Report 106-9]
[From the U.S. Government Publishing Office]

106th Congress                                              Rept. 106-9
  1st Session           HOUSE OF REPRESENTATIVES              Part 1   

=======================================================================

 
        GOVERNMENT WASTE, FRAUD, AND ERROR REDUCTION ACT OF 1999

                                _______
                                

                February 5, 1999.--Ordered to be printed

                                _______

  Mr. Burton of Indiana, from the Committee on Reform, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 436]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 436) to reduce waste, fraud, and error in Government 
programs by making improvements with respect to Federal 
management and debt collection practices, Federal payment 
systems, Federal benefit programs, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
   I. Background and Need for the Legislation.....................    1
  II. Legislative Hearings and Committee Actions..................    3
 III. Committee Hearings and Written Testimony....................    4
  IV. Explanation of the Bill.....................................    5
   V. Committee Oversight Findings................................   12
  VI. Budget Analysis and Projections.............................   12
 VII. Cost Estimate of the Congressional Budget Office............   12
VIII. Statement of Constitutional Authority.......................   17
  IX. Committee Recommendation....................................   17
   X. Congressional Accountability Act; P.L. 104-1................   17
  XI. Unfunded Mandates Reform Act; P.L. 104-4, Section 423.......   17
 XII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b).   18
XIII. Changes in Existing Law....................................    18

                 I. Background and Need for Legislation

    H.R. 436, the Government Waste, Fraud, and Error Reduction 
Act of 1999, amends title 5 and title 31 of the United States 
Code and builds upon earlier debt-collection authorities to 
improve the collection of non-tax, delinquent debts owed the 
Federal Government. It also seeks to reduce waste, fraud, and 
error in Federal benefit and credit programs.
    In April, 1996, Congress passed and the President signed 
into law the Debt Collection Improvement Act delegating 
significant responsibility to the Department of the Treasury to 
maximize the collection of delinquent, non-tax debts owed to 
the Federal Government.\1\ The Debt Collection Improvement Act 
(DCIA) was designed to centralize management of Federal debt 
collection at the Department of the Treasury and to enhance the 
cooperation of Federal agencies in the collection of delinquent 
debt. To achieve these goals, the DCIA created cross-servicing 
and enhanced the Department of the Treasury's offset authority.
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    \1\ The Debt Collection Improvement Act of 1996, Pub. L. 104-134, 
110 Stat. 1321-358. Representative Stephen Horn (R-CA) and 
Representative Carolyn Maloney (D-NY) were the principal cosponsors of 
this bi-partisan legislation.
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    The offset system developed by the Department of the 
Treasury involves a process whereby Federal payments (including 
salaries and benefits) are matched against debts owed to the 
Federal Government. When a match occurs, a portion of the 
payment is intercepted to collect the debt that is owed. 
Certain benefit payments, including Veterans Administration 
benefits and means-tested benefits, are exempt from offset. 
Other benefit payments, including Social Security, Railroad 
Retirement, and Black Lung benefits, are subject to a $9,000 
annual benefit exemption from offset in order to prevent 
hardship upon beneficiaries.
    Governmentwide cross-servicing, the second debt-collection 
tool, requires Federalagencies to refer debts that are over 180 
days delinquent to the Department of the Treasury for centralized 
collection efforts. The Financial Management Service, a division of the 
Department of the Treasury, manages this process, utilizing a variety 
of collection tools and strategies, including private collection 
agencies, demand letters, administrative offsets and negotiated 
repayment agreements.
    The DCIA also enhanced governmentwide debt collection by 
requiring agencies to obtain taxpayer identification numbers, 
by permitting the reporting of non-delinquent consumer debt to 
credit bureaus, and by authorizing Federal agencies to garnish 
the wages of delinquent debtors. Federal agencies were granted 
additional authority to sell delinquent debts. Federal agencies 
were also granted an incentive to collect delinquent debts by 
being allowed to retain a portion of their annual delinquent-
debt collections. Under the DCIA, the Attorney General was 
granted authority to contract with private counsel to pursue 
claims of indebtedness on behalf of the United States.
    Prior to the enactment of the DCIA in April, 1996, several 
other statutory authorities existed for the Federal Government 
to collect government claims. The Federal Claims Collection Act 
of 1966,\2\ directed all agencies to pursue debt collection 
efforts and, subject to a ceiling, authorized compromise, 
suspension and termination of collection actions. A key 
component of the 1966 Act was to establish the policy of 
allowing payment by installments. A 1979 amendment to the Act, 
authorized agencies to report delinquent debts to consumer 
reporting agencies.
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    \2\ Federal Claims Collection Act of 1966, P.L. 97-258, 96 Stat. 
877.
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    The Debt Collection Act of 1982,\3\ provided a statutory 
basis for offsets--intercepting Federal payments owed to 
debtors to satisfy their debts owed the United States. The 1982 
Act enhanced the authority of the United States to offset the 
salary payments due to its employees who are also Federal 
debtors. The 1982 Act also allowed the Federal Government to 
charge debtors for interest, administrative costs and penalties 
on claims. Finally, it established the authority for Federal 
agencies to use private collection agencies.
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    \3\ Debt Collection Act of 1982, Pub.L. 97-365, Oct. 25, 1982, 96 
Stat.1749; Pub.L. 103-272, Sec. 7(b), July 5, 1994, 18 Stat. 1393.
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    At the end of Fiscal Year 1997, the Federal Government 
reported over $1 trillion in outstanding, non-tax receivables 
and guaranteed loans. According to the Department of the 
Treasury, $51.9 billion, or approximately 5 percent of that 
amount, was delinquent. More than $47.2 billion was delinquent 
for more than 180 days.\4\
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    \4\ Portfolio Analysis: Report on the Federal Government's 
Delinquent Non-Tax Debt, by Price Waterhouse LLP, under contract with 
the United States Department of the Treasury (1998).
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    H.R. 436, the Government Waste, Fraud, and Error Reduction 
Act of 1999, addresses the need to improve credit management 
and the collection of delinquent non-tax debt owed the Federal 
Government. This includes the need for improved reporting of 
delinquent debt, enhanced loan sales authority, and additional 
offset authority. The legislation was drafted in response to 
concerns about the implementation of the DCIA raised at a 
number of hearings held by the Subcommittee on Government 
Management, Information and Technology in the 105th Congress. 
Shortcomings in financial management at Federal agencies, 
including the screening of Federal benefit applicants, and 
timely referrals of delinquent debt to the Department of the 
Treasury for offset and cross-servicing also prompted the 
introduction of H.R. 436.

             II. Legislative Hearings and Committee Actions

    H.R. 436 is identical to legislation passed in the 105th 
Congress, H.R. 4857.\5\ H.R. 436 was introduced on February 2, 
1999, by Representative Stephen Horn (R-CA), Chairman of the 
Subcommittee on Government Management, Information, and 
Technology.\6\ The bill was considered by the Committee on 
Government Reform on February 3, 1999, and passed unanimously 
by voice vote.
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    \5\ On March 2, 1998, the Government Reform and Oversight 
Committee's Subcommittee on Government Management, Information and 
Technology held a hearing on the proposal, that was introduced on July 
16, 1998, as H.R. 4243, by Representative Stephen Horn. The 
subcommittee marked up the bill on June 16, 1998 and approved its 
passage by voice vote, with one amendment offered by Representative 
Carolyn Maloney (D-NY). Representative Maloney's amendment, the 
``Federal Benefit Verification and Integrity Act,'' was designed to 
focus increased attention on the screening of Federal benefit 
applicants to reduce waste, fraud and error in Federal credit programs. 
Representative Maloney's amendment was deleted from the bill prior to 
the bills passage by the House of Representatives. On July 23, 1998, 
the Committee on Government Reform and Oversight reported H.R. 4243 to 
the House of Representatives. The House of Representatives passed the 
measure under suspension of the rules, by voice vote, on October 14, 
1998. Following discussions that included the majority and minority 
staff in the House of Representatives and the Senate, as well as 
Administration officials, including representatives from the Office of 
Management and Budget and the Department of the Treasury, technical 
changes were made to the bill. The bill was reintroduced as H.R. 4857, 
and passed the House under suspension of the rules on October 20, 1998. 
H.R. 4857 was received in the Senate the following day, it was not 
approved by the Senate prior to the adjournment of the Senate sine die.
    \6\ H.R. 436, introduced by Representative Stephen Horn (R-CA), was 
cosponsored by Representative Henry Waxman (D-CA), Representative 
Thomas Davis (R-VA), Representative Judy Biggert (R-IL), Representative 
Pete Sessions (R-TX), and Representative Jim Davis (D-FL).
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             III. Committee Hearings and Written Testimony

    In the 105th Congress, the Subcommittee on Government 
Management, Information and Technology held six hearings 
examining various aspects of the implementation of the DCIA.\7\ 
A subcommittee hearing held on April 18, 1997, demonstrated 
weaknesses in the implementation of the Act, particularly on 
the part of the Department of the Treasury. The subcommittee 
held another oversight hearing on November 12, 1997, to examine 
further progress in implementing the law. This hearing once 
again unearthed major problems with the Department of the 
Treasury's implementation of the DCIA. The hearing revealed 
that while the Treasury Department's Financial Management 
Service had spent between $20 million and $30 million 
implementing the DCIA, actual collections amounted to less than 
$3 million. Additionally, the Department of the Treasury was 
slow in drafting and publishing regulations to implement the 
DCIA.
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    \7\ The Subcommittee on Government Management, Information and 
Technology chaired by Congressman Stephen Horn (R-CA) held the 
following hearings on the implementation of the Debt Collection 
Improvement Act of 1996 in the 105th Congress: Implementation of the 
Debt Collection Improvement Act of 1996, 105-45, April 18, 1997; 
Implementation of the Electronic Funds Transfer Provisions of the Debt 
Collection Improvement Act of 1996, 105-63, June 18, 1997; Oversight of 
Federal Debt Collection Practices, 105-121, November 12, 1997; 
Legislative Hearing on the Government Waste, Fraud and Error Reduction 
Act of 1998, H.R. 2347 the Federal Benefit Verification and Integrity 
Act, and H.R. 2063 the Debt Collection Wage Information Act of 1997, 
105-143, March 2, 1998; Improving Federal Debt Collection Practices at 
the Department of Agriculture, 105-172, March 30, 1998; and Oversight 
of the Debt Collection Improvement Act of 1996, held on June 5, 1998.
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    The subcommittee held another oversight hearing on the 
implementation of the DCIA on June 5, 1998, obtaining testimony 
from officials of the Department of the Treasury's Financial 
Management Service and the Office of Inspector General. The 
subcommittee also received testimony from witnesses 
representing the General Accounting Office (GAO), the 
Department of Veterans Affairs, and the Department of Defense. 
The Inspector General of the Department of the Treasury 
testified that the difficulties in implementing the DCIA at the 
Treasury Department were symptomatic of weaknesses in the 
overall strategic planning process. Witnesses from GAO 
identified systems development problems as weaknesses that 
affected the development of a merged administrative, tax and 
salary offset program. GAO also testified that the Treasury 
Department's failure to complete a risk management plan was 
critical, because such a plan provides information necessary to 
focus efforts on areas that pose the greatest risks, and it 
outlines the actions taken to mitigate those risks. Officials 
from the Department of the Treasury agreed to take corrective 
action and establish time frames to meet their objectives.\8\
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    \8\ Witnesses at the June 5, 1998, hearing on Oversight of the 
Implementation of the Debt Collection Improvement Act included John 
Hawke, Undersecretary, Department of the Treasury; Mr. Richard Gregg, 
Commissioner Financial Management Service; Richard Calahan, Acting 
Inspector General, Department of the Treasury; Gary Engel, Associate 
Director, Accounting and Information Management Division, General 
Accounting Office; Mark Catlett, Chief Financial Officer, Department of 
Veterans Affairs; and Nelson Toye, Deputy Comptroller, Department of 
Defense.
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    The subcommittee also heard testimony from officials of the 
Department of the Treasury who stated that the use of private 
collection agencies (PCAs) greatly enhanced the collection of 
delinquent debts. Treasury Department officials testified that 
PCAs were selected on a competitive basis and were continuously 
evaluated on their debt-collection performance.
    Officials from the Treasury Department also testified that 
agencies have been slow to refer delinquent debts to the 
Treasury Department for cross-servicing. This is significant 
since, roughly one-half of the Federal portfolio of debts over 
180 days delinquent had been delinquent for four years or more, 
according to a report compiled at the request of the Department 
of the Treasury.\9\
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    \9\ Portfolio Analysis: Report on the Federal Government's 
Delinquent Non-Tax Debt, by Price Waterhouse LLP, under contract with 
the United States Department of the Treasury (1998).
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    In response to the problems identified at these hearings, 
the subcommittee held a hearing on March 2, 1998, to consider 
legislation, including the Government Waste, Fraud and Error 
Reduction Act, designed to improve debt collection and reduce 
waste, fraud and error in Federal benefit and credit programs. 
The Government Waste, Fraud, and Error Reduction Act of 1998, 
sponsored by subcommittee Chairman Horn, was numbered H.R. 4243 
in the 105th Congress and H.R. 436 in the 106th Congress.

                      IV. Explanation of the Bill

                              A. OVERVIEW

    H.R. 436, the Government Waste, Fraud, and Error Reduction 
Act of 1999, seeks to reduce waste, fraud, and error in Federal 
benefit and credit programs. The bill focuses management 
attention on high-risk programs and builds upon prior debt-
collection initiatives to improve Federal debt-collection 
practices.
    In addition to improving debt collection practices, the 
bill improves financial management by adding Congress, in 
addition to the Office of Management and Budget, as the 
entities that are to receive Federal agencies' annual audited 
financial statements. Audited financial statements shall be 
submitted to the relevant authorizing and appropriations 
Committees in the House of Representatives and the Senate, in 
addition to the Government Reform Committee in the House of 
Representatives and the Governmental Affairs Committee in the 
Senate.
    The bill seeks to improve travel management by requiring 
that Federal employees use travel management centers, 
authorized travel agents, and electronic reservation and 
payment systems. The bill requires the Administrator of General 
Services to develop a mechanism to ensure that Federal 
employees are not charged state and local taxes during official 
travel. The Administrator shall submit a plan to Congress on 
the implementation of this provision no later than March 31, 
2000.
    H.R. 436 addresses the collection of non-tax debt. The bill 
is not intended to address the collection of tax debt or 
otherwise affect the provisions of the Internal Revenue Code. 
The bill improves Federal debt collection by building upon 
prior debt-collection initiatives such as the DCIA and makes a 
number of technical corrections to that Act.
    The bill authorizes the offset of Social Security, Black 
Lung and Railroad Retirement benefits to satisfy past-due child 
support owed to a state in the same manner and under the same 
conditions as those benefits can be offset for debts owed the 
United States. The bill also expands the application of 
gainsharing--allowing Federal agencies to retain a portion of 
debt they collect--to include all delinquent debts owed to the 
Federal Government. Under the DCIA, agencies are authorized to 
retain a percentage of the delinquent loans they collect.
     The bill contains several provisions related to the use 
and evaluation of PCAs in the collection of non-tax delinquent 
debts owed the Federal Government. The first provision 
clarifies the authority of PCAs to obtain necessary information 
about delinquent debtors in order to collect delinquent debts 
owed the Federal Government. A PCA, attempting to collect a 
debt owed the United States through the use of garnishment, 
cannot be precluded from verifying employment information of 
the debtor, including the debtor's place of employment, 
location of payroll office, period of debtor's employment, and 
the amount of compensation received by the debtor.
    The bill also includes a provision mandating the Secretary 
of the Treasury, or the head of an executive, legislative or 
judicial agency, to consider the collection performance of PCAs 
in evaluating their overall performance for the purpose of 
allocating accounts or awarding bonuses. The Committee on 
Government Reform is committed to ensuring that, as in the 
private sector, a PCA's performance is evaluated, allowing 
sufficient weight to be afforded to the PCA's prior collection 
performance. Similarly, in awarding contracts to PCAs, Federal 
agencies should base the award on a formula that considers a 
bidder's prior performance in terms of net amounts collected 
under collection contracts of similar size.
    Consideration of past collection performance in the 
selection and evaluation of PCAs is essential if the Federal 
Government is to maximize returns of outstanding debt. Also, 
when evaluating the performance and awarding contracts to PCAs, 
the bill requires that the frequency of valid debtor complaints 
should be taken into consideration.\10\
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    \10\ The term ``Frequency'' refers to the number of valid debtor 
complaints as a percentage of the volume of debtor contacts made by the 
contractor.
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    The bill clarifies that it, as well as the Debt Collection 
Improvement Act of 1996, is not intended to apply to any 
activities of the Federal Deposit Insurance Corporation 
associated with its statutorily mandated duties to protect, 
operate, and administer the deposit insurance funds. These 
activities include the resolution and liquidation of failed or 
failing insured depository institutions.
    H.R. 436 authorizes the Department of Justice, under 
conditions the Attorney General considers appropriate, to 
obtain the assistance of private--non-governmental--counsel to 
pursue monetary claims on behalf of the Federal Government. In 
some instances, private firms may have knowledge or expertise 
that would be helpful to the Department of Justice when 
pursuing such claims.
    H.R. 436 builds upon the provisions of the DCIA that bar 
delinquent debtors from obtaining loans, loan insurance or loan 
guarantees. Under this bill, a delinquent debtor may not obtain 
financial assistance in the form of a loan (other than a 
disaster loan), loan insurance, loan guarantee, or Federal 
permit or license. This provision provides agencies with 
increased leverage to collect debts from self-employed 
professionals who are delinquent on their debt to the Federal 
Government by denying them the ability to obtain Federal 
licenses or permits.
    The bill requires the Secretary of the Treasury to maintain 
a schedule of eligible PCAs and debt collection centers and to 
refer delinquent non-tax debts promptly in order to maximize 
collections. The bill also requires PCAs to be responsible for 
any administrative costs associated with a collection contract.
    The legislation prohibits agencies from writing off or 
discharging debts prior to the initiation of collection 
activity. The bill specifically requires that prior to 
discharging a debt, a Federal agency must attempt one of a 
number of debt-collection activities, including referring the 
debt to a PCA or debt collection center, referring the debt to 
the Attorney General for litigation, selling the debt, or 
administratively garnishing the debtor.
    This bill promotes the sale of non-tax debts owed the 
Federal Government. The sale of loans would allow Federal 
agencies to obtain the maximum value for loans and debt assets. 
The sale of loans is necessary because Federal agencies have 
performed poorly in their credit management and loan 
administration. According to a 1998 Department of the Treasury 
report, roughly half of the Federal portfolio of delinquent 
debts has been delinquent for four years or more.\11\
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    \11\ Portfolio Analysis: Report on the Federal Government's 
Delinquent Non-Tax Debt, by Price Waterhouse LLP, under contract with 
the United States Department of the Treasury (1998).
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    Federal loan programs have also been a major focus of the 
General Accounting Office's ``High-Risk Series.'' \12\ 
Specifically, GAO has assigned high-risk status to the 
Department of Education's student financial aid programs and 
the Department of Agriculture's Farm Loan programs. GAO has 
also designated the Department of Housing and Urban 
Development, a major creditor agency, at high risk for waste, 
fraud and mismanagement. It should be noted, however, that of 
all the major credit agencies, only HUD, through implementation 
of an asset sales program for both current and delinquent 
loans, showed a significant decrease in total receivables and 
in the rate of delinquencies as a percentage of receivables.
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    \12\ GAO/HR-97, GAO High-Risk Series, February, 1997; and GAO/HR-
99, GAO High-Risk Series An Update, January, 1999.
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    Loan sale programs would benefit the Federal Government in 
a number of ways. The sale of loans in a competitive market 
could yield substantial proceeds. Loan sales would also reduce 
Federal agencies' administrative costs and permit them to focus 
limited resources on other programs. The bill authorizes 
Federal agencies to exempt specific loan programs or classes of 
debt from the sales requirement if the sale would interfere 
with the mission of the agency.
    In an effort to expose debtors who are delinquent on non-
tax debt exceeding $1 million, H.R. 436 requires agencies to 
submit annual reports to Congress, listing the name of the 
debtor, the amount of the debt, collection actions taken by the 
Federal agency, specification of any portion of the debt 
written-down, and an assessment of why the borrower defaulted. 
Where appropriate, Federal agencies are also authorized to 
seize assets pledged to secure the delinquent high-value, non-
tax debt.
    Inspectors General of each agency are required to review 
these reports and make recommendations on ways to improve 
performance in the collection of these high-value, non-tax 
debt. Inspectors General are also required to review and report 
to Congress on Federal agencies' non-tax debt collection 
practices.
    In order to promote the use of electronic payments by the 
Federal Government, the bill authorizes Federal agencies to 
provide for early payment of vendors if they use electronic 
payment technology that improves their cash management and 
businesspractices. Federal agencies are also authorized to 
accept payment electronically, including debit and credit cards, to 
satisfy a non-tax debt owed to the Federal agency.

                     b. section-by-section analysis

Section 1. Short title; table of contents

    The short title of this Act is the ``Government Waste, 
Fraud, and Error Reduction Act of 1999.'' The table of contents 
lists the sections and titles of the bill.

Section 2. Purposes

    The purposes of the Act are:
          (1) To reduce waste, fraud, and error in Federal 
        benefit programs;
          (2) To focus management attention on high-risk 
        programs;
          (3) To improve Federal debt-collection practices;
          (4) To improve Federal payment systems; and
          (5) To improve the reporting on government 
        operations.

Section 3. Definition

    Limits the type of debt covered by this bill to ``non-tax 
debt.''

Section 4. Application of act

    This section states that no provision of the Act applies to 
the Department of the Treasury or the Internal Revenue Service 
to the extent that such provision involves the administration 
of the internal revenue laws or conflicts with the tax law.

                Title I--General Management Improvements

Section 101. Improving financial management

    This section adds Congress in addition to the Office of 
Management and Budget as the entities that are to receive 
annual agency audited financial statements.

Section 102. Improving travel management

    Subsection (a) Makes 5 U.S.C. 5911(e) inapplicable to the 
lodging provisions of Chapter 57 of title 5 dealing with 
Federal employee travel. This provision would allow GSA to 
offer temporary lodging to Federal employees at locations where 
GSA has negotiated discount rates.
    Subsection (b) Requires Federal employees to use travel 
management centers, authorized travel agents, and electronic 
reservation and payment systems for the purpose of improving 
the efficiency and economy of Federal agency travel practices. 
Requires the Administrator of General Services to submit a 
plan, no later than March 31, 2000, on the implementation of 
this provision.
    Subsection (c) Requires the Administrator of General 
Services to develop a mechanism to ensure that Federal 
employees are not charged state and local taxes during travel. 
Requires the Administrator of General Services to develop and 
submit to Congress a plan on the implementation of this 
provision, no later than March 31, 2000.

         Title II--Improving Federal Debt Collection Practices

Section 201. Miscellaneous technical corrections to subchapter II of 
        chapter 37 of title 31 of the United States Code

    Subsection (a) of this section clarifies a glitch in the 
DCIA by authorizing the offset of Social Security, Black Lung, 
and Railroad Retirement benefits to satisfy past-due child 
support owed to a state in the same manner and under the same 
conditions as those benefits can be offset for debts owed the 
United States.
    Subsection (b) strikes the provision of 31 U.S.C. 3711 that 
authorizes an agency to sell any non-tax delinquent debts. 
Title III of this bill creates a comprehensive debt and loan 
sale framework.
    Subsection (c) Makes a technical correction to 31 U.S.C. 
3720C(b)(2)(D) by applying gainsharing to delinquent debts as 
well as delinquent loans.
    Subsection (d) Provisions relating to Private Collection 
Contractors.
    (1) Collection by the Secretary of the Treasury.
    A private collection contractor, attempting to collect a 
debt owed the United States, cannot be precluded from verifying 
a delinquent debtor's current employer, payroll office 
location, period of debtor's employment with current employer, 
and the amount of compensation the debtor receives from 
employer.
    Requires the Secretary of the Treasury to consider a 
contractor's gross collections and the frequency of debtor 
complaints when evaluating the collection contractor's 
performance. Requires a consideration of a collection 
contractor's prior performance under government collection 
contracts when selecting contractors, if applicable. Also 
requires a consideration of the frequency of valid debtor 
complaints against the contractor.
    (2) Collection by a Program Agency. Adds the following to 
the end of 31 U.S.C. 3718:Authorizes a private collection 
contractor, attempting to collect a debt owed the United States, to 
verify the debtor's current employer, payroll office location, period 
of debtor's employment with current employer, and amount of 
compensation debtor receives from employer.
    Requires an agency to consider a contractor's gross 
collections and the frequency of debtor complaints when 
evaluating the collection contractor's performance. Requires a 
consideration of a collection contractors prior performance 
under government collection contracts when selecting 
contractors, if applicable. Also requires a consideration of 
the frequency of valid debtor complaints against the 
contractor.
    Subsections (e) and (f) make clerical amendments to the 
Debt Collection Improvement Act of 1996 (P.L. 104-134).
    Subsection (g) Clarification of Inapplicability of Act to 
Certain Agencies--Makes this Act and the DCIA inapplicable to 
activities carried out pursuant to a law enacted to protect, 
operate, and administer any deposit insurance funds, including 
the resolution and liquidation of failed or failing insured 
depository institutions. This subsection would expressly 
protect those assets collected by the Federal Deposit Insurance 
Corporation, from failed financial institutions, from the scope 
of the DCIA or this Act. Claims made against such property are 
receivership claims.
    Subsection (h) Contracts for Collection Services. This 
section would amend 31 U.S.C. 3718 by authorizing the Attorney 
General to retain private counsel to pursue cases involving 
``any claim of indebtedness, or any monetary claim, including 
any claims for civil fines or penalties, asserted by the 
Attorney General.'' Under the existing section the Attorney 
General is authorized to retain private counsel only to 
``pursue a claim of indebtedness owed the United States.'' 
Private--non-governmental--attorneys, under this section, could 
be paid out of the proceeds of any recovery.

Section 202. Barring delinquent federal debtors from obtaining federal 
        benefits

    Under this section, a delinquent debtor may not obtain 
financial assistance in the form of a loan (other than a 
disaster loan), loan insurance, loan guarantee, Federal permit 
or license. The Secretary of the Treasury may exempt any class 
of claims from the application of this section. An agency may 
also waive the application of this section for benefits 
administered by the agency. The head of an agency may delegate 
the waiver authority to the Chief Financial Officer.

Section 203. Collection and compromise of non-tax debts and claims

    Subsection (a) Use of Private Collection Contractors and 
Federal Debt Collection Centers.
    Requires the Secretary of the Treasury to maintain a 
schedule of eligible private collection contractors and debt 
collection centers and to refer delinquent non-tax debts 
promptly in order to maximize collections. Also requires the 
private collection contractor to be responsible for any 
administrative costs associated with the collection contract.
    Subsection (b) Limitation on Discharge Before Use of 
Private Collection Contractor or Debt Collection Center.
    Precludes an agency from discharging a debt or terminating 
a collection action unless the debt has been referred to a 
private collection contractor or debt collection center, 
referred to the Attorney General for litigation, the debt has 
been sold, administrative wage garnishment has been undertaken, 
or in the event of bankruptcy, death, or disability. An agency 
may waive the application of this provision if doing so would 
be in the best interest of the United States.

           Title III--Sale of Debts Owed to the United States

Sec. 301. Authority to sell non-tax debts

    The head of an agency is authorized, using competitive 
procedures, to sell any non-tax debt owed to the United States 
and administered by the agency. Agencies are also allowed to 
recover certain costs associated with such sales.

Sec. 302. Requirement to sell certain non-tax debts

    Subsection (a) Requires an agency to sell a non-tax loan by 
the later of the date on which the debt becomes 24-months 
delinquent or 24 months after the debt is referred to the 
Secretary of the Treasury.
    Subsection (b) Requires an agency to sell new loans no 
later than 6 months after the loan is disbursed. An agency may 
waive application of this requirement if it is determined, by 
the agency, that the sale would interfere with the mission of 
the agency administering the program under which the loan was 
disbursed.
    Subsection (c) After terminating collection action, an 
agency shall sell any non-tax debt unless the agency determines 
that the sale is not in the best interests of the United 
States. An agency may exempt from sale any class of debt if the 
agency determines that the sale would interfere with the 
mission of the agency. An agency shall not sell a debt that is 
under investigation for fraud or has been referred to the 
Justice Department for litigation.

            Title IV--Treatment of High Value Non-tax Debts

Sec. 401. Annual report on high value non-tax debts

    Requires an agency to submit a report to Congress listing 
each delinquent debt over $1 million, not later than 90 days 
after the end of each fiscal year. The report shall list for 
each debt the name of the person(s) liable for the debt, the 
amount of the debt, the actionsthe agency has taken to collect 
the debt, specification of any portion of the debt written-down, and an 
assessment of why the borrower defaulted.

Sec. 402. Review by inspectors general

    Requires Inspectors General of each agency to review the 
report and make recommendations on ways to improve agency 
performance in the collection of high-value non-tax debt. 
Requires the Inspectors General to review and report to 
Congress on the agency's non-tax debt collection practices.

Sec. 403. Requirement to seek seizure and forfeiture of assets securing 
        high-value non-tax debt

    Authorizes an agency, where appropriate, to seize assets 
pledged to secure a delinquent high-value non-tax debt owed the 
agency.

                       Title V--Federal Payments

Sec. 501. Promoting electronic payments

    Subsection (a) Authorizes an agency to provide for early 
payment of vendors in cases where an agency will implement an 
electronic payment technology that improves agency cash 
management and business practice.
    Subsection (b) Authorizes an agency to accept payment 
electronically, including debit and credit cards, to satisfy a 
non-tax debt owed to the agency.

                    V. Committee Oversight Findings

    Pursuant to rule XIII, clause 3(c)(1), of the Rules of the 
House of Representatives, the results and findings for those 
oversight activities are incorporated in the recommendations 
found in the bill and in this report.

                  VI. Budget Analysis and Projections

    Clause 3(c)(2) of rule XIII, of the Rules of the House of 
Representatives, is inapplicable because the bill does not 
provide new budget authority, new spending authority, new 
credit authority, or an increase or decrease in revenues or tax 
expenditures.

         VII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 5, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 436, the 
Government Waste, Fraud, and Error Reduction Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts for federal 
costs are John R. Righter and Sheila Dacey. The contact for the 
state and local impact is Susan Sieg.
            Sincerely,
                                              ------ ------
                                    (For Dan L. Crippen, Director.)
    Enclosure.

H.R. 436--Government Waste, Fraud, and Error Reduction Act of 1999

    Summary: H.R. 436 would amend the Debt Collection 
Improvement Act (DCIA) of 1996. The bill would bar delinquent 
debtors from obtaining certain federal benefits, authorize the 
Financial Management Service (FMS) of the Department of the 
Treasury to offset certain benefit payments to collect past-due 
child support, and require federal agencies to sell certain 
assets and to report annually to the Congress on debts over $1 
million.
    Enacting H.R. 436 would affect direct spending, and pay-as-
you-go procedures would apply to the bill. Specifically, CBO 
estimates that offsetting Social Security payments to collect 
past-due child support would increase federal collections by 
less than $500,000 in fiscal year 1999, by $2 million in fiscal 
year 2000, and by $4 million each year thereafter. In addition, 
subject to the availability of appropriated funds, CBO 
estimates that implementing H.R. 436 would increase federal 
reporting costs by less than $500,000 in fiscal year 1999, by 
about $1 million in fiscal year 2000, and by less than $500,000 
each year thereafter.
    H.R. 436 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no additional costs on the budgets of state, 
local, or tribal governments.
    Estimated cost to the federal government: The estimated 
budget impact of H.R. 436 is shown in the following table. For 
the purposes of this estimate, CBO assumes the bill will be 
enacted by the summer of 1999 and that the amounts necessary to 
implement the bill will be appropriated for each year. The 
costs of this legislation fall within multiple budget 
functions.

                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                              1999     2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
Changes in direct spending:
    Estimated budget authority............................        a       -2       -4       -4       -4       -4
    Estimated outlays.....................................        a       -2       -4       -4       -4       -4
Changes in spending subject to appropriation:
    Estimated authorization level.........................        a        1        aaaa
    Estimated outlays.....................................        a        1        aaaa
----------------------------------------------------------------------------------------------------------------
a Less than $500,000.

Basis of estimate

            Direct spending
    While much of H.R. 436 would codify current practice, a few 
provisions would affect collections of the federal government 
from both past-due child support and delinquent nontax debt. In 
total, CBO estimates that implementing these provisions would 
decrease direct spending by $18 million over the 1999-2004 
period.
    Increasing the Federal Share of Collections from Past-Due 
Child Support. H.R. 436 would allow states to collect past-due 
child support by withholding Social Security, Black Lung, and 
Railroad Retirement Board (RRB) payments. CBO estimates that 
adding past-due child support to the list of debts that can be 
administratively offset from those payments would result in $10 
million more in annual child support collections, of which the 
federal government would, on average, retain $4 million. We 
expect those levels to apply beginning in fiscal year 2001, 
with smaller effects in earlier years.
    The Social Security Administration can withhold past-due 
child support payments from monthly checks under current law, 
but the process is not used much and an insignificant amount is 
collected annually. H.R. 436 would make the process easier to 
administer and would thus result in higher child support 
collections.
    Based on data from the Survey of Income and Program 
Participation (SIPP) and calculations by the Urban Institute, 
CBO estimates that 25,000 noncustodial parents both receive 
Social Security benefits and have unpaid child support. Because 
parents affected by the legislation are generally younger than 
62, we assume that most of them receive Social Security 
benefits under the Disability Insurance (DI) program rather 
than the retirement or survivors programs. (As with the 
collection of delinquent federal debt, we assume that payments 
made under the Supplemental Security Income program would be 
exempt from the administrative offset.) The DCIA limits the 
amount that can be withheld annually from an individual's 
Social Security checks to the lesser of any amount over $9,000 
or 15 percent of the benefits. Only one-half of the 
noncustodial parents are assumed to receive benefits high 
enough to allow FMS to offset their payments. On average, those 
offsets could amount to about $1,600 annually and could yield 
$20 million in collections for child support from Social 
Security payments. (CBO expects that the annual increase in 
collections from RRB and Black Lung payments would be 
insignificant.)
    CBO estimates that the additional collections under H.R. 
436 would be only about one-half of the potential $20 million 
because of several factors. First, noncustodial parents are 
younger than average DI recipients, and younger men receive 
lower DI benefits than older men. Second, children of DI 
recipients are entitled to a benefit from Social Security that 
averages more than $2,000 annually. Some states consider these 
benefits in determining the amount of the child support owed by 
the noncustodial parent. Consequently, those children probably 
have lower-than-average child support awards and the Social 
Security offset would be lower than average. Finally, CBO 
assumes that a small percentage of all noncustodial parents 
owing past-due child support would slip through the 
administrative offset process.
    The estimated $10 million in additional child support 
collections each year would result in a net increase in federal 
offsetting receipts of $4 million annually. The estimate 
assumes that 70 percent of new collections would be on behalf 
of families that receive or formerly received cash assistance 
from the federal government's Temporary Assistance to Needy 
Families (TANF) program or its predecessors. Such collections 
are retained by federal and state governments as reimbursements 
for past cash assistance paid to families. The federal share of 
TANF collections is 53 percent.
    CBO assumes that states would not fully participate in the 
program until 2001. Increases in DI benefit levels and the 
amounts required for child support under court orders would 
result in higher federal receipts over time, but new rules 
affecting how much of the child support payments the federal 
government can retain would have an opposite effect. CBO 
estimates that those two effects would offset each other.
    Decreasing the Collection of Delinquent Nontax Debt. 
Allowing FMS to offset Social Security, Black Lung, and RRB 
payments to collect past-due child support payments would 
decrease the collection of delinquent nontax debt. CBO 
estimates, however, that this change would increase direct 
spending by less than $500,000 annually.
    Under existing law, the collection of child support on 
behalf of a family that receives or formerly received TANF 
benefits takes precedence over the collection of delinquent 
federal debt in the payment offset process. That is, if before 
making a federal salary or pension payment, FMS discovers that 
the payee owes past-due child support, received TANF benefits, 
and is delinquent on a federal loan, then FMS must first offset 
the salary or pension payment to collect the child support. 
Once the child support is collected, FMS can then further 
offset the payment to collect the delinquent debt, provided 
that sufficient funds remain. CBO assumes that same order of 
priority would apply to collections involving Social Security 
and the other payments.
    The DCIA allows the use of offsets against Social Security 
payments to collect delinquent nontax debt; FMS expects to 
implement that authority by the spring of 1999. According to 
the Department of the Treasury and Price Waterhouse, which 
conducted a test matching a month's worth of Social Security 
payments against the database of debts referred to FMS, between 
$37 million and $61 million in delinquent federal debts could 
eventually be collected from Social Security payments each 
year. Based on information from that test and CBO's estimate of 
the increased collection of past-due child support, CBO 
estimates that the collection of federal debt--primarily for 
loan repayments and recoveries for defaults on loan 
guarantees--would decline by less than $500,000 a year.
    The Federal Credit Reform Act of 1990 requires that 
legislation altering the estimated subsidy cost for direct 
loans and loan guarantees be scored on a present-value basis. 
For existing loans and guarantees, the amount of an estimated 
change in the present value of credit cash flows is recorded in 
the budget in the year in which the legislation is enacted--in 
this case, in fiscal year 1999. Based on CBO's estimate of the 
cash value of the foregone collections, we estimate that the 
provision's effect on delinquent nontax debt would increase 
direct spending by less than $500,000.
    Authorizing Private Collection Agencies to Verify 
Employment Information. H.R. 436 could increase the collection 
of federal debt by clarifying that private collection agencies 
can verify the employment information of a federal debtor for 
the purpose of garnishing the individual's wages. FMS only 
recently issued the final regulations to implement the 
authority provided under the DCIA; thus, private collection 
agencies have yet to use wage garnishment to collect delinquent 
federal debts assigned to them. In addition, the DCIA 
authorizesrestrict this authority. CBO estimates that any 
increase in collections from enacting the provision would be 
negligible.
    Barring Delinquent Nontax Debtors from Obtaining Federal 
Benefits. Finally, the bill would amend the provision in the 
DCIA banning delinquent nontax debtors from obtaining certain 
federal benefits. Specifically, the bill would broaden the 
definition of benefits to include federal licenses and fees. 
The bill would allow the Secretary of the Treasury to exempt 
certain debts and would allow agencies that issue permits and 
licenses to exempt those items from the ban. Adding federal 
licenses and fees to the definition of benefits could increase 
collections of delinquent debt. In addition, to the extent that 
a delinquent high-value debtor does not obtain a license or 
permit, the provision would decrease the collection of fees. 
CBO estimates that the changes would have a negligible effect 
on direct spending.
            Spending subject to appropriation
    H.R. 436 also would affect agencies' discretionary costs 
for collecting debts and for managing federal travel. In total, 
CBO estimated that, subject to the availability of appropriated 
funds, implementing H.R. 436 would increase federal costs by 
less than $500,000 in fiscal year 1999, by less than $1 million 
in fiscal year 2000, and by less than $500,000 each year 
thereafter. In addition, requiring that agencies sell certain 
debts and allowing them to recoup more of their costs from the 
proceeds of such sales could further affect discretionary 
costs, but we have no basis for estimating the impact from any 
potential sales that might arise under the bill.
    Reports and Regulations. H.R. 436 would require (1) GSA to 
write regulations and file both a plan and a report with the 
Congress by March 31, 2000, on improving the management of 
federal travel; (2) FMS to revise several of the regulations it 
has issued for implementing provisions of the DCIA; (3) 
agencies to report to the Congress each year nontax debts of 
more than $1 million; and (4) the inspectors general at such 
agencies to periodically review and report to the Congress on 
the agencies' efforts to collect nontax debt, particularly 
debts of more than $1 million. In total, CBO estimates that 
implementing these provisions would increase administrative 
costs at agencies by less than $500,000 in fiscal year 1999, by 
$1 million in fiscal year 2000, and by less than $500,000 in 
fiscal year 1999, by $1 million in fiscal year 2000, and by 
less than $500,000 each year thereafter. Based on information 
provided by GSA, CBO estimates that any savings in federal 
travel costs from the new regulations would be small.
    Security Clearances. The bill would clarify that, to the 
maximum extent practicable, private collection agencies are 
responsible for all administrative costs related to their 
servicing of federal debts. The federal government is currently 
paying the costs to obtain special security clearances for 
certain, high-level employees at collection agencies. Because 
the clearances are a one-time requirement for a few employees 
at each collection agency, CBO estimates that the savings from 
enacting this provision would be negligible.
    Asset Sales. H.R. 436 could further affect discretionary 
costs because it would amend the existing authority for 
agencies to sell assets. Specifically, subject to 
appropriation, it would allow agencies to sell any nontax debt 
and would, in general, require that agencies sell any loan that 
is more than two years delinquent and any new loan within six 
months of its disbursement. The bill would provide broad 
authority for agencies to exempt loans from the requirement. 
Currently, agencies can sell debts that are more than 90 days 
delinquent and are generally required to sell debts for which 
they have terminated their collection efforts. In addition, 
H.R. 436 would expand the type of expenses for which agencies 
can retain a portion of the proceeds from such sales, including 
the costs of contracts for collection services; fees of 
appraisers, auctioneers, and realty brokers; and costs of 
advertising and surveying. CBO has no basis for predicting how 
these changes would affect agencies' asset sales and related 
spending.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects in the current year, 
the budget year, and the succeeding four years are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Changes in outlays..........................................       0      -2      -4      -4      -4      -4      -4      -4      -4      -4      -4
    Changes in receipts.........................................                                      Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
H.R. 436 contains no intergovernmental mandates as defined in 
UMRA. Provisions in the bill that would allow states to collect 
past-due child support from certain types of federal benefit 
payments would result in net additional state collections 
totaling about $3 million annually.
    Estimated impact on the private sector: The bill contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: John R. Righter and 
Sheila Dacey. Impact on State, Local and Tribal Governments: 
Susan Sieg.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

              VIII. Statement of Constitutional Authority

     Pursuant to rule XIII, clause 3(d)(1), the Committee finds 
that clauses 14 and 18 of Article I, Section 8 of the U.S. 
Constitution authorizes Congress to create a Chief Financial 
Officer in the Executive Office of the President. Clause 1 and 
18 of Article I, Section 8 of the Constitution grants Congress 
the power to enact this law.

                      IX. Committee Recommendation

     On February 3, 1999, a quorum being present, the Committee 
ordered the bill favorably reported to the House for 
consideration by voice vote.

         X. Congressional Accountability Act; Public Law 104-1

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(B)(3) of the Congressional Accountability Act (P.L. 104-1).

    XI. Unfunded Mandates Reform Act; Public Law 104-4, Section 423

    The Committee finds that the legislation does not impose 
any Federal mandates within the meaning of section 423 of the 
Unfunded Mandates Reform Act (P.L. 104-4).

    XII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that the legislation does not establish 
or authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

      XIII. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(g) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *

SUBTITLE III--FINANCIAL MANAGEMENT

           *       *       *       *       *       *       *

CHAPTER 35--ACCOUNTING AND COLLECTION

           *       *       *       *       *       *       *

SUBCHAPTER II--ACCOUNTING REQUIREMENTS, SYSTEMS, AND INFORMATION

           *       *       *       *       *       *       *

Sec. 3515. Financial statements of agencies

  (a) Not later than March 1 of [1997] 2000 and each year 
thereafter, the head of each executive agency identified in 
section 901(b) of this title shall prepare and submit to 
Congress and the Director of the Office of Management and 
Budget an audited financial statement for the preceding fiscal 
year, covering all accounts and associated activities of each 
office, bureau, and activity of the agency.

           *       *       *       *       *       *       *

  [(e) The Director of the Office of Management and Budget may 
waive the application of all or part of subsection (a) for 
financial statements required for fiscal years 1996 and 1997.
  [(f) Not later than March 1 of 1995 and 1996, the head of 
each executive agency identified in section 901(b) of this 
title and designated by the Director of the Office of 
Management and Budget shall prepare and submit to the Director 
of the Office of Management and Budget an audited financial 
statement for the preceding fiscal year, covering all accounts 
and associated activities of each office, bureau, and activity 
of the agency.
  [(g) Not later than March 31 of 1995 and 1996, for executive 
agencies not designated by the Director of the Office of 
Management and Budget under subsection (f), the head of each 
executive agency identified in section 901(b) of this title 
shall prepare and submit to the Director of the Office of 
Management and Budget a financial statement for the preceding 
fiscal year, covering--
          [(1) each revolving fund and trust fund of the 
        agency; and
          [(2) to the extent practicable, the accounts of each 
        office, bureau, and activity of the agency which 
        performed substantial commercial functions during the 
        preceding fiscal year.
  [(h) For purposes of subsection (g), the term ``commercial 
functions'' includes buying and leasing of real estate, 
providing insurance, making loans and loan guarantees, and 
other credit programs and any activity involving the provision 
of a service or thing for which a fee, royalty, rent, or other 
charge is imposed by an agency for services and things of value 
it provides.]

           *       *       *       *       *       *       *

CHAPTER 37--CLAIMS

           *       *       *       *       *       *       *

          SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT

3711.  Collection and compromise.
     * * * * * * *
[3720B.  Barring delinquent Federal debtors from obtaining Federal loans 
          or loan insurance guarantees.]
3720B.  Barring delinquent Federal debtors from obtaining Federal 
          benefits.

           *       *       *       *       *       *       *

         SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT

Sec. 3711. Collection and compromise

  (a) * * *

           *       *       *       *       *       *       *

  (g)(1) * * *

           *       *       *       *       *       *       *

  (5) [Nontax claims referred or transferred under this section 
shall be serviced, collected, or compromised, or collection 
action thereon suspended or terminated, in accordance with 
otherwise applicable statutory requirements and authorities. 
Executive departments and agencies operating debt collection 
centers may enter into agreements with the Secretary of the 
Treasury to carry out the purposes of this subsection. The 
Secretary of the Treasury shall--
          [(A) maintain competition in carrying out this 
        subsection;
          [(B) maximize collections of delinquent debts by 
        placing delinquent debts quickly;
          [(C) maintain a schedule of private collection 
        contractors and debt collection centers eligible for 
        referral of claims; and
          [(D) refer delinquent debts to the person most 
        appropriate to collect the type or amount of claim 
        involved.]
  (5)(A) Nontax debts referred or transferred under this 
subsection shall be serviced, collected, or compromised, or 
collection action thereon suspended or terminated, in 
accordance with otherwise applicable statutory requirements and 
authorities.
  (B) The head of each executive agency that operates a debt 
collection center may enter into an agreement with the 
Secretary of the Treasury to carry out the purposes of this 
subsection.
  (C) The Secretary of the Treasury shall--
          (i) maintain a schedule of private collection 
        contractors and debt collection centers operated by 
        agencies that are eligible for referral of claims under 
        this subsection;
          (ii) maximize collections of delinquent nontax debts 
        by referring delinquent nontax debts to private 
        collection contractors promptly;
          (iii) maintain competition between private collection 
        contractors;
          (iv) ensure, to the maximum extent practicable, that 
        a private collection contractor to which a nontax debt 
        is referred is responsible for any administrative costs 
        associated with the contract under which the referral 
        is made.
  (D) As used in this paragraph, the term ``nontax debt'' means 
any debt other than a debt under the Internal Revenue Code of 
1986 or the Tariff Act of 1930.

           *       *       *       *       *       *       *

  (9)(A) Before discharging any delinquent debt owed to any 
executive, judicial, or legislative agency, the head of such 
agency shall take all appropriate steps to collect such debt, 
including (as applicable and subject to subparagraph (B))--
          [(A)] (i) administrative offset,
          [(B)] (ii) tax refund offset,
          [(C)] (iii) Federal salary offset,
          [(D)] (iv) referral to private collection 
        contractors,
          [(E)] (v) referral to agencies operating a debt 
        collection center,
          [(F)] (vi) reporting delinquencies to credit 
        reporting bureaus,
          [(G)] (vii) garnishing the wages of delinquent 
        debtors, and
          [(H)] (viii) litigation or foreclosure.
  (B)(i) The head of an executive, judicial, or legislative 
agency may not discharge a nontax debt or terminate collection 
action on a nontax debt unless the debt has been referred to a 
private collection contractor or a debt collection center, 
referred to the Attorney General for litigation, sold without 
recourse, administrative wage garnishment has been undertaken, 
or in the event of bankruptcy, death, or disability.
  (ii) The head of an executive, judicial, or legislative 
agency may waive the application of clause (i) to any nontax 
debt, or class of nontax debts if the head of the agency 
determines that the waiver is in the best interest of the 
United States.
  (iii) As used in this subparagraph, the term ``nontax debt'' 
means any debt other than a debt under the Internal Revenue 
Code of 1986 or the Tariff Act of 1930.

           *       *       *       *       *       *       *

  (11) In attempting to collect under this subsection through 
the use of garnishment any debt owed to the United States, a 
private collection contractor shall not be precluded from 
verifying the debtor's current employer, the location of the 
payroll office of the debtor's current employer, the period the 
debtor has been employed by the current employer of the debtor, 
and the compensation received by the debtor from the current 
employer of the debtor.
  (12)(A) The Secretary of the Treasury shall provide that any 
contract with a private collection contractor under this 
subsection shall include a provision in the contract that the 
contractor shall be subject to penalties under the contract--
          (i) if the contractor fails to comply with any 
        restrictions imposed under applicable law regarding the 
        collection activities of debt collectors; or
          (ii) if the contractor engages in unreasonable or 
        abusive debt collection practices in connection with 
        the collection of debt under the contract.
  (B) Notwithstanding any other provision of law, a private 
collection contractor under this subsection shall not be 
subject to any liability or contract penalties in connection 
with efforts to collect a debt pursuant to a contract under 
this subsection by reason of actions that are required by the 
contract or by applicable law or regulations.
  (13) In evaluating the performance of a contractor under any 
contract entered into under this subsection, the Secretary of 
the Treasury shall consider the contractor's gross collections 
net of commissions (as a percentage of account amounts placed 
with the contractor) under the contract. The frequency of valid 
debtor complaints shall also be considered in the evaluation 
criteria.
  (14) In selecting contractors for performance of collection 
services, the Secretary of the Treasury shall evaluate bids 
received through a methodology that considers the bidder's 
prior performance in terms of net amounts collected under 
Government collection contracts of similar size, if applicable. 
The frequency of valid debtor complaints shall also be 
considered in the evaluation criteria.

           *       *       *       *       *       *       *

  [(i)(1) The head of an executive, judicial, or legislative 
agency may sell, subject to section 504(b) of the Federal 
Credit Reform Act of 1990 and using competitive procedures, any 
nontax debt owed to the United States that is delinquent for 
more than 90 days. Appropriate fees charged by a contractor to 
assist in the conduct of a sale under this subsection may be 
payable from the proceeds of the sale.
  [(2) After terminating collection action, the head of an 
executive, judicial, or legislative agency shall sell, using 
competitive procedures, any nontax debt or class of nontax 
debts owed to the United States, if the Secretary of the 
Treasury determines the sale is in the best interests of the 
United States.
  [(3) Sales of nontax debt under this subsection--
          [(A) shall be for--
                  [(i) cash, or
                  [(ii) cash and a residuary equity or profit 
                participation, if the head of the agency 
                reasonably determines that the proceeds will be 
                greater than sale solely for cash,
          [(B) shall be without recourse, but may include the 
        use of guarantees if otherwise authorized, and
          [(C) shall transfer to the purchaser all rights of 
        the Government to demand payment of the nontax debt, 
        other than with respect to a residuary equity or profit 
        participation under subparagraph (A)(ii).
  [(4)(A) Within one year after the date of enactment of the 
Debt Collection Improvement Act of 1996, each executive agency 
withcurrent and delinquent collateralized nontax debts shall 
report to the Congress on the valuation of its existing portfolio of 
loans, notes and guarantees, and other collateralized debts based on 
standards developed by the Director of the Office of Management and 
Budget, in consultation with the Secretary of the Treasury.
  [(B) The Director of the Office of Management and Budget 
shall determine what information is required to be reported to 
comply with subparagraph (A). At a minimum, for each financing 
account and for each liquidating account (as those terms are 
defined in sections 502(7) and 502(8), respectively, of the 
Federal Credit Reform Act of 1990) the following information 
shall be reported:
          [(i) The cumulative balance of current debts 
        outstanding, the estimated net present value of such 
        debts, the annual administrative expenses of those 
        debts (including the portion of salaries and expenses 
        that are directly related thereto), and the estimated 
        net proceeds that would be received by the Government 
        if such debts were sold.
          [(ii) The cumulative balance of delinquent debts, 
        debts outstanding, the estimated net present value of 
        such debts, the annual administrative expenses of those 
        debts (including the portion of salaries and expenses 
        that are directly related thereto), and the estimated 
        net proceeds that would be received by the Government 
        if such debts were sold.
          [(iii) The cumulative balance of guaranteed loans 
        outstanding, the estimated net present value of such 
        guarantees, the annual administrative expenses of such 
        guarantees (including the portion of salaries and 
        expenses that are directly related to such guaranteed 
        loans), and the estimated net proceeds that would be 
        received by the Government if such loan guarantees were 
        sold.
          [(iv) The cumulative balance of defaulted loans that 
        were previously guaranteed and have resulted in loans 
        receivables, the estimated net present value of such 
        loan assets, the annual administrative expenses of such 
        loan assets (including the portion of salaries and 
        expenses that are directly related to such loan 
        assets), and the estimated net proceeds that would be 
        received by the Government if such loan assets were 
        sold.
          [(v) The marketability of all debts.
  [(5) This subsection is not intended to limit existing 
statutory authority of agencies to sell loans, debts, or other 
assets.]

           *       *       *       *       *       *       *

Sec. 3716. Administrative offset

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (6) Any [Federal agency] executive, judicial, or legislative 
agency that is owed by a person a past due, legally enforceable 
nontax debt that is over 180 days delinquent, including nontax 
debt administered by a third party acting as an agent for the 
Federal Government, shall notify the Secretary of the Treasury 
of all such nontax debts for purposes of administrative offset 
under this subsection.
  (h)(1) * * *
  (2) This subsection does not apply to--
          (A) * * *

           *       *       *       *       *       *       *

          (C) the disbursement of any class or type of payment 
        exempted by the Secretary of the Treasury at the 
        request of [a Federal agency] an executive, judicial, 
        or legislative agency.
  [(3) In applying this section with respect to any debt owed 
to a State, subsection (c)(3)(A) shall not apply.]
          (3) In applying this subsection with respect to any 
        debt owed to a State, other than past due support being 
        enforced by the State, subsection (c)(3)(A) shall not 
        apply.

           *       *       *       *       *       *       *

Sec. 3718. Contracts for collection services

  (a) * * *

           *       *       *       *       *       *       *

  (b)(1)(A) The Attorney General may make contracts retaining 
private counsel to furnish legal services, including 
representation in negotiation, compromise, settlement, and 
litigation, in the case of any claim of indebtedness owed the 
United States, or any monetary claim, including any claims for 
civil fines or penalties, asserted by the Attorney General. 
Each such contract shall include such terms and conditions as 
the Attorney General considers necessary and appropriate, 
including a provision specifying the amount of the fee to be 
paid to the private counsel under such contract or the method 
for calculating that fee. The amount of the fee payable for 
legal services furnished under any such contract may not exceed 
the fee that counsel engaged in the private practice of law in 
the area or areas where the legal services are furnished 
typically charge clients for furnishing legal services in the 
collection of claims of indebtedness or in connection with 
other monetary claims, as determined by the Attorney General, 
considering the amount, age, and nature of the indebtedness or 
claim and whether the debtor or other person is an individual 
or a business entity. Nothing in this subparagraph shall 
relieve the Attorney General of the competition requirements 
set forth in title III of the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 251 and 
following).

           *       *       *       *       *       *       *

  (d) Notwithstanding section 3302(b) of this title, a contract 
under subsection (a) or (b) of this section may provide that a 
fee a person charges to recover indebtedness owed or any other 
monetary claim of, or to locate or recover assets of, the 
United States Government is payable from the amount recovered.

           *       *       *       *       *       *       *

  (h) In attempting to collect under this subsection through 
the use of garnishment any debt owed to the United States, a 
private collection contractor shall not be precluded from 
verifying the currentplace of employment of the debtor, the 
location of the payroll office of the debtor's current employer, the 
period the debtor has been employed by the current employer of the 
debtor, and the compensation received by the debtor from the current 
employer of the debtor.
  (i)(1) The head of an executive, judicial, or legislative 
agency that contracts with a private collection contractor to 
collect a debt owed to the agency, or a guaranty agency or 
institution of higher education that contracts with a private 
collection contractor to collect a debt owed under any loan 
program authorized under title IV of the Higher Education Act 
of 1965, shall include a provision in the contract that the 
contractor shall be subject to penalties under the contract--
          (A) if the contractor fails to comply with any 
        restrictions imposed under applicable law on the 
        collection activities of debt collectors; or
          (B) if the contractor engages in unreasonable or 
        abusive debt collection practices in connection with 
        the collection of debt under the contract.
  (2) Notwithstanding any other provision of law, a private 
collection contractor under this section shall not be subject 
to any liability or contract penalties in connection with 
efforts to collect a debt owed to an executive, judicial, or 
legislative agency, or owed under any loan program authorized 
under title IV of the Higher Education Act of 1965, by reason 
of actions required by the contract, or by applicable law or 
regulations.
  (j) In evaluating the performance of a contractor under any 
contract for the performance of debt collection services 
entered into by an executive, judicial, or legislative agency, 
the head of the agency shall consider the contractor's gross 
collections net of commissions (as a percentage of account 
amounts placed with the contractor) under the contract. The 
frequency of valid debtor complaints shall also be considered 
in the evaluation criteria.
  (k) In selecting contractors for performance of collection 
services, the head of an executive, judicial, or legislative 
agency shall evaluate bids received through a methodology that 
considers the bidder's prior performance in terms of net 
amounts collected under government collection contracts of 
similar size, if applicable. The frequency of valid debtor 
complaints shall also be considered in the evaluation criteria.

           *       *       *       *       *       *       *

Sec. 3720A. Reduction of tax refund by amount of debt

  (a) Any [Federal agency] executive, judicial, or legislative 
agency that is owed by a person a past-due, legally enforceable 
debt (including debt administered by a third party acting as an 
agent for the Federal Government) shall, and any agency subject 
to section 9 of the Act of May 18, 1933 (16 U.S.C. 831h), owed 
such a debt may, in accordance with regulations issued pursuant 
to subsections (b) and (d), notify the Secretary of the 
Treasury at least once each year of the amount of such debt.
  (b) No [Federal agency] executive, judicial, or legislative 
agency may take action pursuant to subsection (a) with respect 
to any debt until such agency--
          (1) * * *

           *       *       *       *       *       *       *

  (c) Upon receiving notice from any [Federal agency] 
executive, judicial, or legislative agency that a named person 
owes to such agency a past-due legally enforceable debt, the 
Secretary of the Treasury shall determine whether any amounts, 
as refunds of Federal taxes paid, are payable to such person. 
If the Secretary of the Treasury finds that any such amount is 
payable, he shall reduce such refunds by an amount equal to the 
amount of such debt, pay the amount of such reduction to such 
agency, and notify such agency of the individual's home 
address.

           *       *       *       *       *       *       *

  (e) Any [Federal agency] executive, judicial, or legislative 
agency receiving notice from the Secretary of the Treasury that 
an erroneous payment has been made to such agency under 
subsection (c) shall pay promptly to the Secretary, in 
accordance with such regulations as the Secretary may 
prescribe, an amount equal to the amount of such erroneous 
payment (without regard to whether any other amounts payable to 
such agency under such subsection have been paid to such 
agency).
  (h)(1) The disbursing official of the Department of the 
Treasury--
          (1) * * *

           *       *       *       *       *       *       *

          (3) shall match payment records with requests for 
        offset by using a name control, taxpayer identifying 
        number (as that term is used in section 6109 of the 
        Internal Revenue Code of 1986), and any other necessary 
        identifiers.[''.
  [(h)(2) The term ``disbursing official'' of the Department of 
the Treasury means the Secretary or his designee.]
For purposes of this subsection, the disbursing official for 
the Department of the Treasury is the Secretary of the Treasury 
or his or her designee.

           *       *       *       *       *       *       *

[Sec. 3720B. Barring delinquent Federal debtors from obtaining Federal 
                    loans or loan insurance guarantees

  [(a) Unless this subsection is waived by the head of a 
Federal agency, a person may not obtain any Federal financial 
assistance in the form of a loan (other than a disaster loan) 
or loan insurance or guarantee administered by the agency if 
the person has an outstanding debt (other than a debt under the 
Internal Revenue Code of 1986) with any Federal agency which is 
in a delinquent status, as determined under standards 
prescribed by the Secretary of the Treasury. Such a person may 
obtain additional loans or loan guarantees only after such 
delinquency is resolved in accordance with those standards. The 
Secretary of the Treasury may exempt, at the request of an 
agency, any class of claims.
  [(b) The head of a Federal agency may delegate the waiver 
authority under subsection (a) to the Chief Financial Officer 
of the agency. The waiver authority may be redelegated only to 
the Deputy Chief Financial Officer of the agency.]

Sec. 3720B. Barring delinquent Federal debtors from obtaining Federal 
                    benefits

  (a)(1) A person shall not be eligible for the award or 
renewal of any Federal benefit described in paragraph (2) if 
the person has an outstanding nontax debt that is in a 
delinquent status with any executive, judicial, or legislative 
agency, as determined under standards prescribed by the 
Secretary of the Treasury. Such a person may obtain additional 
Federal benefits described in paragraph (2) only after such 
delinquency is resolved in accordance with those standards.
  (2) The Federal benefits referred to in paragraph (1) are the 
following:
          (A) Financial assistance in the form of a loan (other 
        than a disaster loan) or loan insurance or guarantee.
          (B) Any Federal permit or license otherwise required 
        by law.
  (b) The Secretary of the Treasury may exempt any class of 
claims from the application of subsection (a) at the request of 
an executive, judicial, or legislative agency.
  (c)(1) The head of any executive, judicial, or legislative 
agency may waive the application of subsection (a) to any 
Federal benefit that is administered by the agency based on 
standards promulgated by the Secretary of the Treasury.
  (2) The head of an executive, judicial, or legislative agency 
may delegate the waiver authority under paragraph (1) to the 
chief financial officer of the agency.
  (3) The chief financial officer of an agency to whom waiver 
authority is delegated under paragraph (2) may redelegate that 
authority only to the deputy chief financial officer of the 
agency. The deputy chief financial officer may not redelegate 
such authority.
  (d) As used in this section, the term ``nontax debt'' means 
any debt other than a debt under the Internal Revenue Code of 
1986 or the Tariff Act of 1930.

Sec. 3720C. Debt Collection Improvement Account

  (a) * * *
  (b)(1) Not later than 30 days after the end of a fiscal year, 
an agency may transfer to the Account the amount described in 
paragraph (3), as adjusted under paragraph (4).
  (2) Agency transfers to the Account may include collections 
from--
          (A) * * *

           *       *       *       *       *       *       *

          (D) sales of [delinquent loans] debts; and

           *       *       *       *       *       *       *

CHAPTER 39--PROMPT PAYMENT

           *       *       *       *       *       *       *

Sec. 3903. Regulations

  (a) The Director of the Office of Management and Budget shall 
prescribe regulations to carry out section 3902 of this title. 
The regulations shall--
          [(1) provide that the required payment date is--
                  [(A) the date payment is due under the 
                contract for the item of property or service 
                provided; or
                  [(B) 30 days after a proper invoice for the 
                amount due is received if a specific payment 
                date is not established by contract;]
          (1) provide that the required payment date is--
                  (A) the date payment is due under the 
                contract for the item of property or service 
                provided; or
                  (B) no later than 30 days after a proper 
                invoice for the amount due is received if a 
                specific payment date is not established by 
                contract;

           *       *       *       *       *       *       *

          (8) permit an agency to make payment up to 7 days 
        prior to the required payment date, or earlier as 
        determined by the agency to be necessary on a case-by-
        case basis; [and]
          (9) prescribe the methods for computing interest 
        under section 3903(c) of this title[.]; and
          (10) provide that the Director of the Office of 
        Management and Budget may waive the application of 
        requirements under paragraph (1) to provide for early 
        payment of vendors in cases where an agency will 
        implement an electronic payment technology which 
        improves agency cash management and business practice.

           *       *       *       *       *       *       *

                              ----------                              

               CHAPTER 59 OF TITLE 5, UNITED STATES CODE

CHAPTER 59--ALLOWANCES

           *       *       *       *       *       *       *

SUBCHAPTER II--QUARTERS

           *       *       *       *       *       *       *

Sec. 5911. Quarters and facilities; employees in the United States

  (a) * * *

           *       *       *       *       *       *       *

  (e) The head of an agency may not require an employee or 
member of a uniformed service to occupy quarters on a rental 
basis, unless the agency head determines that necessary service 
cannot be rendered, or that property of the Government cannot 
adequately be protected, otherwise. The preceding sentence 
shall not apply with respect to lodging provided under chapter 
57 of this title.

           *       *       *       *       *       *       *

                                    
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