a

GAO

United States General Accounting Office

Report to Congressional Recipients

April 2004 JUDGMENT FUND

Treasury’s Estimates 

of Claim Payment 

Processing Costs 

under the No FEAR 

Act and Contract 

Disputes Act

GAO-04-481
www.gao.gov/cgi-bin/getrpt?GAO-04-481.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact George H. 

Stalcup at (202) 512-9490 or 

stalcupg@gao.gov. 

Highlights of GAO-04-481, a report to 

congressional recipients 

April 2004

JUDGMENT FUND 

Treasury’s Estimates of Claim Payment 

Processing Costs Under the No FEAR Act 

and Contract Disputes Act 

Treasury estimates that it cost about $334,000 to certify, pay, and seek 

reimbursement for CDA claim payments in fiscal year 2003, and about 

$240,000 to certify and pay discrimination claims that year. For fiscal year 

2004, assuming relatively constant case and processing cost levels, and 

agency compliance with reimbursement requirements similar to that 

experienced under CDA, Treasury estimates that it will incur about $171,500 

in personnel costs in order to seek reimbursements for No FEAR claim 

payments (see table below). These include recurring costs to set up and 

administer accounts receivable and seek reimbursement from agencies for 

claims paid out of the Judgment Fund and a one-time cost for in-house 

personnel to upgrade computer systems. 

Although the certification, payment, and accounting processes that Treasury 

uses for the No FEAR Act are virtually the same as those used for CDA, the 

procedures Treasury is required to use to seek reimbursement for claims 

paid under the No FEAR Act will differ. For example, as part of Treasury’s 

effort to seek reimbursement for No FEAR Act claims paid, No FEAR Act 

regulations require Treasury to record on its public Web site the failure of 

agencies to make reimbursement or arrange to make reimbursement within 

a specified time limit. There is no similar requirement under CDA claims. 

During fiscal years 2001, 2002, and 2003, federal agencies reimbursed 

Treasury for fewer than one of every five dollars owed under CDA, with at 

least 18 agencies having unpaid amounts at the end of each fiscal year. 

According to Treasury, while its No FEAR Act collection efforts are just 

beginning, reimbursement rates under the act may be as low as under CDA 

because the No FEAR Act, like CDA, does not impose reimbursement 

deadlines on agencies, and Treasury has very little authority to enforce 

reimbursement. 

Estimated Cost of Seeking Reimbursement for No FEAR Act Claim Payments in Fiscal Year 

2004 

The Notification and Federal 

Employee Antidiscrimination and 

Retaliation (No FEAR) Act, which 

took effect October 1, 2003, 

requires agencies to repay 

discrimination settlements and 

judgments paid on their behalf. 

The No FEAR Act is similar to the 

Contract Disputes Act (CDA) of 

1978, which holds agencies 

accountable for payment in 

contract disputes. Under both 

laws, federal agencies must 

reimburse the Judgment Fund, 

which is administered by the 

Treasury Department. Before the 

No FEAR Act, agencies did not 

have to repay the fund. 

The No FEAR Act requires GAO to 

review the financial impact on 

Treasury of administering that law 

and CDA. Based on this 

requirement, this report provides 

information on (1) Treasury’s 

estimates of its costs to process 

discrimination claim payments and 

CDA payments in fiscal year 2003 

and its costs to process and seek 

reimbursement for claim payments 

under lawsuits covered by the No 

FEAR Act beginning in fiscal year 

2004, (2) differences in claims 

processing and reimbursement 

efforts under CDA and the No 

FEAR Act, and (3) the extent of 

federal agency compliance with 

CDA’s reimbursement 

requirements and Treasury’s view 

of how effective its No FEAR Act 

collection efforts may be. We 

make no recommendations in this 

report. Treasury officials had no 

official comment on the report. 
Page i GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Contents

Letter 1

Results in Brief 3

Background 4

Treasury Expects to Incur Additional Costs under the No FEAR Act 

to Seek Reimbursement for Discrimination Claims 6

Processes for Certifying and Paying CDA and No FEAR Act Claim 

Payments Are the Same, but Collection Efforts Will Differ 8

Reimbursement Rates for Contract Dispute Payments Have Been 

Low, Similar Rates Expected under the No FEAR Act 9

Agency Comments 11

Appendix I: Scope and Methodology 14

Appendix II: GAO Contact and Staff Acknowledgments 15

GAO Contact 15

Acknowledgments 15

Tables Table 1: Estimated Costs of Processing Contract Disputes Act 

Claim Payments, Fiscal Year 2003 6

Table 2: Estimated Costs of Processing Discrimination Claim 

Payments, Fiscal Year 2003 6

Table 3: Estimated Cost of Seeking Reimbursement for No FEAR 

Act Claim Payments in Fiscal Year 2004 7

Table 4: Amount of Contract Dispute Claim Payments Collected by 

the Judgment Fund during Fiscal Years 2001 through 2003 

and Unpaid Balance at End of Each Fiscal Year 10

Abbreviations

No FEAR Act Notification and Federal Employee Antidiscrimination and 

Retaliation Act 

CDA Contract Disputes Act 

FMS Financial Management Service

OPM Office of Personnel Management

MSPB Merit Systems Protection Board

CFO Chief Financial Officer
Page ii GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

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Page 1 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

United States General Accounting Office

Washington, D.C. 20548

A

April 28, 2004 Letr

Congressional Recipients

Before the Notification and Federal Employee Antidiscrimination and 

Retaliation (No FEAR) Act of 2002 was enacted on May 15, 2002,1 we and 

others expressed concern that federal agencies had an incentive to avoid 

settling discrimination and whistleblower protection complaints in order to 

have any final judgment against the agency rendered by a court.2

 This 

incentive arose from the fact that agencies paid costs from their 

appropriations when such complaints were settled without a lawsuit being 

filed, but that any money awarded after a suit was filed (whether by 

settlement or court judgment) was generally paid from the Judgment Fund, 

a permanent, indefinite appropriation administered by the Department of 

the Treasury. We estimated that the Judgment Fund paid almost

$43 million for discrimination claims in fiscal year 2000 on behalf of 

agencies.3

The Judgment Fund continues to pay money awarded for settlements and 

judgments under lawsuits covered by the No FEAR Act. But beginning on 

October 1, 2003, the effective date of the act, each federal agency must 

reimburse the Treasury for the amounts paid from the fund. As we noted in 

testimony describing how the No FEAR Act addresses the need for federal 

agency accountability with respect to discrimination and whistleblower 

protection cases, Congress faced a similar situation when lawmakers 

passed the Contract Disputes Act (CDA) of 1978.4

 Before CDA was enacted, 

agencies had an incentive to avoid settling contract disputes so that any 

final judgments against an agency occurred in court because the Judgment 

Fund paid such court judgments. Under CDA, however, agencies must 

reimburse the fund from available appropriations or, if they are not 

adequate, seek additional appropriations for this purpose. 

1

Pub. L. No. 107-174, 116 Stat. 566.

2

U.S. General Accounting Office, The Federal Workforce: Observations on Protections From 

Discrimination And Reprisal for Whistleblowing, GAO-01-715T, (Washington, D.C.: 

May 9, 2001).

3

The Judgment Fund also pays other claims, such as personal injury, property damage, and 

contract claims. Agencies are generally not required to reimburse the Judgment Fund for 

payments made on their behalf.

4

Pub. L. No. 95-563, 92 Stat. 2383 (November 1, 1978).
Page 2 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

From fiscal year 2001 through 2003 under the Judgment Fund, 1,140 

discrimination claim payments were processed and about $656 million was 

paid. All of these claims were for court judgments and settlements. During 

this period, the fund also processed 304 CDA claim payments and paid 

about $713 million. This included payments for court judgments and 

settlements and board of contract appeals awards.5

 The fund did not make 

any payments for whistleblower protection claims as these payments were 

typically made by agencies.6

The No FEAR Act requires that we review the financial impact on the 

Treasury of administering both the No FEAR Act and CDA. Based on this 

requirement and discussions with committee staff, this report provides 

information on (1) Treasury’s estimates of costs to process CDA and 

discrimination payments for fiscal year 2003 and its estimates to process 

and seek reimbursement for No FEAR Act claim payments in fiscal year 

2004, (2) differences in payment processing under CDA and the No FEAR 

Act, and (3) the extent of federal agencies’ compliance with CDA’s 

reimbursement requirement and Treasury officials’ view of how effective 

the reimbursement collection efforts under the No FEAR Act may be. 

We obtained information from Treasury’s Financial Management Service 

(FMS), which administers the Judgment Fund, 7

 on the costs of processing 

Judgment Fund reimbursement payments in fiscal year 2003 and estimated 

costs in fiscal year 2004. Since FMS does not track the cost of processing 

Judgment Fund claim payments, agency officials could only provide us 

with estimates of the costs, based primarily on staff time spent processing 

these claims. We reviewed supporting documentation, interviewed 

Judgment Fund officials, and compared the estimated personnel costs to 

the percentage of claims paid to determine the reasonableness of the cost 

estimate (that is, if the estimated costs were disproportionately large when 

compared to the number of claims processed). On the basis of our 

5

Boards of Contract Appeals are administrative tribunals within larger executive branch 

agencies that hear contract dispute appeals. While administrative awards are not normally 

paid from the Judgment Fund, CDA authorized payments of board of contract appeals 

awards out of the Judgment Fund.

6

Whistleblower protection claims are prohibited personnel practice claims and are typically 

resolved administratively through the Merit Systems Protection Board.

7

FMS also provides central payment services to federal program agencies, operates the 

federal government’s collections and deposit systems, provides governmentwide accounting 

and reporting services, and manages the collection of delinquent debts.
Page 3 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

assessment, we determined that the data provided by Treasury in its 

estimates were sufficiently reliable for the purposes of our report. We 

interviewed FMS officials to determine the differences between the No 

FEAR Act’s and CDA’s payment processing and to obtain the officials’ views 

of how effective the reimbursement collection efforts allowed under the No 

FEAR Act may be. To determine the extent of federal agency compliance 

with CDA’s reimbursement requirement, we obtained from FMS 

information on the amount of money sought and received from agencies in 

fiscal years 2001, 2002, and 2003. (See app. I for more detailed information 

on our scope and methodology.) We conducted our work from November 

2002 to February 2004 in accordance with generally accepted government 

accounting standards.

Results in Brief Treasury estimates that it cost about $334,000 to certify, pay, and seek 

reimbursement for CDA claim payments in fiscal year 2003 and about 

$240,000 to certify and pay discrimination claims that year. In arriving at its 

estimate of the costs of processing discrimination payments under the No 

FEAR Act in fiscal year 2004, Treasury assumed that the number of 

discrimination cases and the legal and administrative costs for processing 

these cases would remain relatively constant. Treasury’s estimates of fiscal 

year 2004 costs for No FEAR Act claim payments also assumed that agency 

compliance with the No FEAR Act would be similar to that under CDA. 

Actual costs to Treasury may vary from the estimates because of 

differences in the nature of the claims under the two laws. On the basis of 

the above assumptions, Treasury estimated that it will allocate about 

$171,500 from its personnel budget in order to seek reimbursement for 

discrimination and any other No FEAR Act claims payments in fiscal year 

2004. Treasury’s estimate is comprised of both one-time and recurring 

costs. Treasury estimates about $119,500 in recurring costs to set up and 

administer accounts receivable and seek reimbursement for No FEAR Act 

claims and a one-time start-up cost of about $52,000 for in-house personnel 

to upgrade computer systems. Treasury plans to absorb any increase in 

costs within its existing budget.

Although the certification, payment, and accounting mechanisms that 

Treasury uses for No FEAR Act and CDA payments are virtually the same, 

Treasury’s current efforts under CDA and anticipated efforts under the No 

FEAR Act to seek reimbursement from federal agencies contain 

differences. Certification for both No FEAR Act and CDA payments is 

accomplished using the same review process. Payments are made through 

the same Treasury financial center, and payments are recorded on the 
Page 4 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Judgment Fund’s books in the same way. In seeking reimbursement from 

federal agencies, however, Treasury is required to use a different chain of 

correspondence for the No FEAR Act than it has for CDA. To prompt 

agencies to make No FEAR Act reimbursements, No FEAR Act regulations 

issued by the Office of Personnel Management (OPM) require Treasury to 

annually record on its public Web site an agency’s failure to make 

reimbursements within a specified time limit or to make arrangements to 

do so within the limit. There are no similar requirements for CDA 

reimbursements, and Treasury has no plans to post on the Web agency 

failures to make such reimbursements. 

Federal agencies reimbursed the Judgment Fund for fewer than one of 

every five dollars they owed for CDA payments in each of fiscal years 2001, 

2002, and 2003. At least 18 agencies owed money to the Judgment Fund at 

the end of each of the 3 years. Our review of a sample of agencies’ 

correspondence in response to the Judgment Fund branch’s requests for 

CDA reimbursement showed that agencies most often deferred payment 

because of the adverse effect they said it would have on their programs and 

mission-critical activities. According to Treasury, while its No FEAR Act 

collection efforts are just beginning, reimbursement rates under the act 

may be as low as under CDA because the No FEAR Act, like CDA, does not 

impose reimbursement deadlines on agencies, and Treasury has very little 

authority to enforce reimbursement. 

Treasury officials had no official comments on this report, but provided 

technical and clarifying comments, which we have incorporated as 

appropriate. 

Background In 1956, Congress established the Judgment Fund—a permanent, indefinite 

appropriation—to pay judgments against federal agencies that are not 

otherwise provided for in agency appropriations.8

 Among other things, the 

fund is intended to allow for more prompt payments to claimants, thereby 

reducing the assessment of interest against federal agencies (where 

allowed by law) during the period between the rendering and payment of 

an award. In 1961, legislation was enacted allowing the fund to pay

8

Pub. L. No. 814, § 1302, 70 Stat. 678, 694 (July 27, 1956) (codified at 31 U.S.C. § 1304).
Page 5 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Department of Justice settlements of ongoing or imminent lawsuits against 

federal agencies.9

The No FEAR Act requires federal agencies to reimburse the Judgment 

Fund for payments of judgments, awards, or settlements that the fund 

makes to employees, former employees, or job applicants in connection 

with litigation alleging violation of certain federal laws. The Senate 

committee report10 accompanying the No FEAR Act explains that the act is 

intended to prompt federal agencies to pay more attention to their equal 

employment opportunity and whistleblower complaint activities and act 

more expeditiously to resolve complaints before they get to court. 

Accordingly, No FEAR Act cases include those brought before federal 

courts under discrimination statutes and certain cases brought before the 

Merit Systems Protection Board (MSPB), including discrimination and 

whistleblower protection claims. These latter cases, however, typically 

result in either a settlement while the case is pending at MSPB or an award 

issued by MSPB, both of which are paid out of agency funds, not the 

Judgment Fund.

As provided for under the No FEAR Act, the President designated OPM to 

issue regulations to carry out the agency reimbursement provisions of the 

law. OPM’s interim final regulations11 issued earlier this year state that the 

procedures that agencies must use to reimburse the Judgment Fund are 

those prescribed by FMS. 

Under procedures prescribed by Treasury, FMS Judgment Fund branch 

analysts, in consultation with FMS’s Office of the Chief Counsel, certify 

whether a judgment, award, or settlement is appropriate for payment and 

whether the agency on whose behalf payment was made must reimburse 

the fund. FMS does not review the merits underlying the claim nor certify 

the merits of the judgment or award. 

9

Pub. L. No. 87-187, 75 Stat. 415 (August 30, 1961).

10S. Rep. No. 107-143, at 2 (2002).

1169 Fed. Reg. 2997 (Jan. 22, 2004) (to be codified at 5 C.F.R. pt. 724).
Page 6 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Treasury Expects to 

Incur Additional Costs 

under the No FEAR Act 

to Seek 

Reimbursement for 

Discrimination Claims 

FMS estimates that in fiscal year 2003 it spent about $334,000 to certify, pay, 

and seek reimbursement for CDA claim payments and about $240,000 to 

certify and pay discrimination claims (see tables 1 and 2). 

Table 1: Estimated Costs of Processing Contract Disputes Act Claim Payments, 

Fiscal Year 2003

Source: FMS.

Table 2: Estimated Costs of Processing Discrimination Claim Payments, Fiscal Year 

2003

Source: FMS.

Note: There were no costs associated with seeking reimbursement for discrimination payments 

because the No FEAR Act had not yet taken effect.

a While processing more discrimination payments than CDA payments in fiscal year 2003, FMS 

allocated administrative processing, certification and documentation review, and FMS attorney costs 

arising from the two laws equally in estimating its costs for the No FEAR Act.

Cost Amount (in dollars)

Non-Judgment fund branch personnel 

Accounts receivable set-up and administration $4,442

Reimbursement collection efforts 22,214

FMS attorneys 10,621

Judgment fund branch personnel 

Certification and documentation review 46,887

Mail processing 3,564

Reimbursement collection efforts 63,146

Total personnel cost 150,874

Total administrative cost 182,671

Total $333,545

Cost Amount (in dollars)

FMS attorneys $10,621

Certification and documentation review (Judgment Fund 

personnel)

46,887

Total personnel cost 57,508

Total administrative cost a 182,671

Total $240,179
Page 7 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

FMS estimates that it will have to allocate approximately $171,500 for 

personnel costs to seek reimbursement for discrimination claims under the 

No FEAR Act in fiscal year 2004 (see table 3). This estimate includes about 

$119,500 in costs to set up and administer accounts receivable and seek 

reimbursement for No FEAR Act payments. FMS estimates that it will also 

incur a one-time start-up cost of about $52,000 for its information 

technicians to upgrade computer systems to create and track No FEAR Act 

accounts receivable. FMS expects no increase in either the number of 

personnel or budgeted funds to handle No FEAR Act reimbursements.

Table 3: Estimated Cost of Seeking Reimbursement for No FEAR Act Claim 

Payments in Fiscal Year 2004 

Source: FMS.

a

The estimate assumes that the cost for setting up and administering accounts receivable for No FEAR 

Act payments in fiscal year 2004 will be the same as this cost was for CDA payments the previous 

year.

b

There will be no such costs after fiscal year 2004.

FMS’s estimates assume that it will pay the same number of discrimination 

claim payments under the No FEAR Act in fiscal year 2004 as it paid the 

previous year. FMS estimates also assume there will be no increase in the 

cost for processing discrimination claim payments in fiscal year 2004. 

Treasury’s estimate of fiscal year 2004 costs for No FEAR Act claim 

payments also assumed that agency compliance with the No FEAR Act 

would be similar to that under CDA. According to the Judgment Fund 

branch, actual costs to Treasury may vary from the estimate because of 

differences in the nature of the claims under the two laws.

Cost Amount (in dollars)

Accounts receivable set-up and administrationa $4,442

Reimbursement collection efforts 115,004

System upgrades to open accounts receivable for the 

No FEAR Actb

52,000

Total $171,446
Page 8 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Processes for 

Certifying and Paying 

CDA and No FEAR Act 

Claim Payments Are 

the Same, but 

Collection Efforts Will 

Differ

Although the certification, payment, and accounting mechanisms that FMS 

uses for No FEAR Act and CDA payments are virtually the same, some of 

Treasury’s current and anticipated procedures to seek reimbursement from 

federal agencies for claims paid under the two laws differ. 

Accounting for Payments Is 

the Same under the Two 

Laws

For both No FEAR Act and CDA payments, the Judgment Fund branch 

analysts ensure that all documents submitted by the agency and other 

parties have (1) the proper signatures and court seals, (2) contact name 

and telephone number, and (3) an appropriate address. Payment from the 

Judgment Fund is then certified by FMS and made through Treasury’s 

Philadelphia Financial Center by check or electronic funds transfer. Once 

payment is made, FMS reduces the fund’s balance, records an expense by 

the fund, and records an account receivable in its recoveries account for 

the federal agency on whose behalf the payment was made. The debtor 

federal agency is required to record an account payable to the Judgment 

Fund. Those amounts remain a receivable on FMS’s books and a payable on 

the agency’s books until it reimburses the fund. FMS sends letters to 

agencies to verify account balances quarterly. The agencies must also 

review their balances and confirm them to FMS.

According to FMS, on the basis of the cash receipts history for federal 

agencies and the age of some of the Judgment Fund’s accounts receivable, 

it expects that a percentage of the money owed by federal agencies will 

probably not be paid back. To allow for this, FMS calculates a percentage, 

which it calls an allowance factor, based on the age of the receivable and 

the agency’s payment history. According to FMS, it applies the allowance 

factor to an agency’s outstanding accounts receivable to arrive at a dollar 

amount that FMS puts into an allowance account, which is used by FMS to 

report on the status of the Judgment Fund in its financial statement. 

According to FMS, although it records the debt in the allowance account as 

an uncollectible loss, the debt is not written off. FMS expects each agency 

to record the amount of unreimbursed debt as a liability, which will remain 

until the agency repays Treasury or Congress provides write-off authority. 
Page 9 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Reimbursement Efforts for 

CDA and the No FEAR Act 

Differ

For CDA reimbursements, FMS sends a letter to the head of the agency 

contracting unit or budget officer seeking reimbursement for payments 

made either the same day or the day after payment is made from the fund. 

If the agency fails to contact FMS within 30 business days of this letter, a 

follow-up letter is sent to the agency. If the agency fails to respond within 

60 business days of the initial contact letter, FMS sends a letter to the 

agency’s Chief Financial Officer (CFO). The agency CFO has 30 business 

days to contact FMS. 

For No FEAR Act reimbursements, as provided under the OPM regulations, 

FMS provides notice to the agency’s CFO within 15 business days after 

payment for the No FEAR Act claim from the Judgment Fund. It further 

requires an agency to either reimburse the Judgment Fund or work out a 

payment arrangement with FMS within 45 business days of being notified 

by FMS. 

Under OPM’s No FEAR Act regulations, FMS is required to annually post on 

Treasury’s public Web site those agencies that either fail to make 

reimbursements or fail to contact FMS within 45 business days of notice to 

make arrangements in writing for reimbursement. There is no similar 

posting requirement for CDA reimbursements, and FMS said it has no plans 

to post CDA reimbursement information on Treasury’s public Web site. 

Reimbursement Rates 

for Contract Dispute 

Payments Have Been 

Low, Similar Rates 

Expected under the No 

FEAR Act 

Reimbursement rates for CDA payments were low for the 3 years we 

examined and, despite promises of repayment, at least 18 agencies had not 

repaid amounts owed to the fund by the end of each of these years. 

According to Treasury, while its No FEAR Act collection efforts are just 

beginning, reimbursement rates under the act may be as low as under CDA 

because the No FEAR Act, like CDA, does not impose reimbursement 

deadlines on agencies, and Treasury has very little authority to enforce 

reimbursement. 

Amounts Owed to the 

Judgment Fund Have 

Increased in the Last 

3 Fiscal Years

The Judgment Fund was reimbursed for fewer than one of every five 

dollars agencies owed for each of the 3 fiscal years (see table 4). Further, 

the total unpaid amounts to the Judgment Fund increased as of each fiscal 

year end. The total amount and percentage collected was at its highest in 

fiscal year 2001 and was lowest in fiscal year 2002. While the total amount 
Page 10 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

and percentage collected increased in fiscal year 2003, they remained less 

than in fiscal year 2001. 

Table 4: Amount of Contract Dispute Claim Payments Collected by the Judgment 

Fund during Fiscal Years 2001 through 2003 and Unpaid Balance at End of Each 

Fiscal Year

Source: FMS.

a

Calculated by dividing the amount collected during the fiscal year by the unpaid balance at the end of 

the year plus the amount collected during that fiscal year.

Our review of a sample of agencies’ correspondence in response to the 

Judgment Fund branch’s requests for CDA reimbursement showed that 

agencies most often deferred payment because of the adverse effect they 

said it would have on their programs and mission-critical activities. The 

agencies promised to continue to seek opportunities to provide repayment 

through the budget and appropriation process. 

Because Enforcement 

Authority Is Limited under 

Both Laws, Reimbursement 

Rates Are Expected to Be 

Similarly Low

Neither CDA nor the No FEAR Act set deadlines for reimbursement. We 

have acknowledged that agencies are allowed to exercise reasonable 

discretion in determining the timing of CDA reimbursements so as not to 

cause the disruption of ongoing programs or activities. Similar flexibility 

exists under the No FEAR Act. While the No FEAR Act states that 

“agencies are expected to reimburse the [Fund] within a reasonable time,” 

the statute also states that an agency may need to extend reimbursement 

over several years to avoid reductions in force, furloughs, other reductions 

in compensation or benefits for the agency workforce, or an adverse effect 

on the mission of the agency.12 Recognizing that agencies are often 

confronted with practicalities of this sort, we have suggested that while an 

agency may not be in a position to make CDA reimbursements during the 

2001 2002 2003

Amount collected during fiscal year $310,409,773 $196,123,712 $279,268,859 

 Unpaid balance at end of fiscal year $1,412,948,605 $1,461,768,909 $1,567,337,604 

Percentage collected a 18 12 15

Number of agencies owing money at 

year end

24 18 19

12Pub. L. No. 107-174, § 102.
Page 11 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

year in which the fund made payment, we would expect the agency to 

manage its budgetary resources to accommodate reimbursement of the 

fund before the beginning of the second fiscal year following the fiscal year 

in which the award is paid.13

According to FMS, the lack of a reimbursement deadline under CDA and 

the No FEAR Act may be one reason that reimbursement rates under the 

No FEAR Act may be as low as they have been under CDA. Another key 

reason that FMS officials cite for this possibility is that Treasury has very 

little authority to enforce reimbursement. Like CDA, the No FEAR Act 

provides no sanctions that would compel agencies to reimburse the 

Treasury, and no Treasury authority to take money owed directly from the 

agency. FMS officials recognize that the requirement for FMS to annually 

post the names of agencies that fail to make No FEAR Act reimbursements 

or make arrangements for reimbursement may provide an incentive for 

agencies to comply with the regulations. Because posting has yet to begin, 

it remains to be seen what impact this requirement will have. 

Agency Comments On March 18, 2004, we provided a draft of this report to Treasury for review 

and comment. Treasury officials had no official comment on this report, 

but provided technical and clarifying comments, which we have 

incorporated as appropriate. 

We will send copies to Representative James F. Sensenbrenner, 

Representative John Conyers, other interested congressional committees, 

the Secretary of the Treasury, and the Commissioner, Financial 

Management Service. We will also make copies available to others upon 

13U.S. General Accounting Office, Principles of Federal Appropriations Law, vol. 3, 2nd ed., 

GAO/OGC-94-33 (Washington, D.C., Nov. 1994) Ch. 12, at 78.
Page 12 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

request. In addition, the report will be available at no charge on GAO’s Web 

site at http://www.gao.gov. If you or your staff have questions about this 

report, please call me at (202) 512-6806 or Belva Martin, Assistant Director, 

on (202) 512-4285. Key contributors to this report are listed in appendix II.

George H. Stalcup

Director, Strategic Issues
Page 13 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Congressional Recipients

The Honorable Ted Stevens

President Pro Tempore

United States Senate

The Honorable J. Dennis Hastert

Speaker of the House

House of Representatives 

The Honorable Susan M. Collins

Chairman 

Committee on Governmental Affairs

United States Senate

The Honorable Joseph I. Lieberman 

Ranking Minority Member 

Committee on Governmental Affairs

United States Senate

The Honorable Jo Ann Davis

Chairwoman 

Subcommittee on Civil Service 

and Agency Organization

Committee on Government Reform

House of Representatives

The Honorable Danny K. Davis

Ranking Minority Member 

Subcommittee on Civil Service 

and Agency Organization

Committee on Government Reform 

House of Representatives

The Honorable John Ashcroft

Attorney General

Department of Justice
Page 14 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Appendix I

 Scope and Methodology ApendxiI

To address our objectives, we reviewed relevant laws, procedures, and 

guidelines, and interviewed officials in FMS, its Judgment Fund branch, 

and FMS’s Office of the Chief Counsel. Judgment Fund officials provided us 

with the number and amount of CDA and discrimination claims paid from 

the Judgment Fund from fiscal year 2001 through 2003. Since FMS does not 

track the cost of processing Judgment Fund claim payments, agency 

officials could only provide us with estimates of the costs for processing 

payments and reimbursements for CDA and discrimination payments and 

the estimated increase in costs for fiscal year 2004 for processing 

discrimination and any other No FEAR Act claim payments. The Judgment 

Fund's cost estimates do not include costs for processing payments of 

whistleblower protection claims because the fund generally does not pay 

these claims. To arrive at their estimate of the personnel costs involved, 

Judgment Fund officials used the percentage of staff time spent processing 

CDA and discrimination payments. To determine the extent of federal 

agencies’ compliance with CDA’s reimbursement requirement, we obtained 

data through FMS from Treasury’s central accounting system on the 

amount of money sought and received from agencies in fiscal years 2001, 

2002, and 2003. We interviewed Judgment Fund and FMS officials to obtain 

their views of how effective the reimbursement collection efforts allowed 

under the No FEAR Act may be. 

To assess the reliability of the data from Treasury’s financial system, we 

reviewed available supporting documentation and interviewed Judgment 

Fund officials and the FMS accountant. In addition, we tested the 

reasonableness of the fiscal year 2003 estimated personnel costs of 

processing CDA and discrimination claims by calculating the percentage of 

personnel costs in the fund’s total fiscal year 2003 estimate and comparing 

this to the percentage of CDA and discrimination claims in fiscal year 2003 

to determine if they were disproportionately large when compared to the 

total number of claims processed. On the basis of our test of the 

reasonableness of the personnel cost estimates provided by FMS and our 

assessment of the reliability of the data generated by the accounting system 

used by FMS and the Judgment Fund branch database, we determined that 

the data for fiscal years 2001 through 2003 were sufficiently reliable for the 

purposes of our report.
Page 15 GAO-04-481 Treasury’s Estimates of Cost for Implementing No FEAR

Appendix II

GAO Contact and Staff Acknowledgments ApendxiI

GAO Contact Belva Martin, (202) 512-4285

Acknowledgments In addition to the person named above, Karin Fangman, Amy Friedlander, 

Domingo Nieves, and Michael Rose made key contributions to this report.

(450164)
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