I
105TH CONGRESS
2D SESSION
H. R. 4857
To reduce waste, fraud, and error in Government programs by making im-
provements with respect to Federal management and debt collection
practices, Federal payment systems, Federal benefit programs, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 20, 1998
Mr. HORN (for himself, Mr. WAXMAN, Mr. SESSIONS, Mr. SUNUNU, and Mr.
KANJORSKI) introduced the following bill; which was referred to the Com-
mittee on Government Reform and Oversight, and in addition to the
Committee on the Judiciary, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To reduce waste, fraud, and error in Government programs
by making improvements with respect to Federal man-
agement and debt collection practices, Federal payment
systems, Federal benefit programs, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Government Waste, Fraud, and Error Reduction Act of
1998’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definition.
Sec. 4. Application of Act.
TITLE I—GENERAL MANAGEMENT IMPROVEMENTS
Sec. 101. Improving financial management.
Sec. 102. Improving travel management.
TITLE II—IMPROVING FEDERAL DEBT COLLECTION PRACTICES
Sec. 201. Miscellaneous technical corrections to subchapter II of chapter 37 of
title 31, United States Code.
Sec. 202. Barring delinquent Federal debtors from obtaining Federal benefits.
Sec. 203. Collection and compromise of nontax debts and claims.
TITLE III—SALE OF DEBTS OWED TO UNITED STATES
Sec. 301. Authority to sell debts.
Sec. 302. Requirement to sell certain debts.
TITLE IV—TREATMENT OF HIGH VALUE DEBTS
Sec. 401. Annual report on high value debts.
Sec. 402. Review by Inspectors General.
Sec. 403. Requirement to seek seizure and forfeiture of assets securing high
value debt.
TITLE V—FEDERAL PAYMENTS
Sec. 501. Promoting electronic payments.
SEC. 2. PURPOSES.
The purposes of this Act are the following:
(1) To reduce waste, fraud, and error in Fed-
eral benefit programs.
(2) To focus Federal agency management at-
tention on high-risk programs.
(3) To better collect debts owed to the United
States.
(4) To improve Federal payment systems.
(5) To improve reporting on Government oper-
ations.
SEC. 3. DEFINITION.
As used in this Act, the term ‘‘nontax debt’’ means
any debt (within the meaning of that term as used in
chapter 37 of title 31, United States Code) other than a
debt under the Internal Revenue Code of 1986 or the Tar-
iff Act of 1930.
SEC. 4. APPLICATION OF ACT.
No provision of this Act shall apply to the Depart-
ment of the Treasury or the Internal Revenue Service to
the extent that such provision—
(1) involves the administration of the internal
revenue laws; or
(2) conflicts with the Internal Revenue Service
Restructuring and Reform Act of 1998, the Internal
Revenue Code of 1986, or the Tariff Act of 1930.
TITLE I—GENERAL
MANAGEMENT IMPROVEMENTS
SEC. 101. IMPROVING FINANCIAL MANAGEMENT.
(a) REPEAL.—Section 3515 of title 31, United States
Code, is amended—
(1) in subsection (a)—
(A) by striking ‘‘1997’’ and inserting
‘‘1999’’; and
(B) by inserting ‘‘Congress and’’ after
‘‘submit to’’;
(2) by striking subsection (e); and
(3) by striking subsections (f), (g), and (h).
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), this section shall take effect on the date
of the enactment of this Act.
(2) SECRETARY’S
WAIVER
AUTHORITY.—Sub-
section (a)(1) of this section shall take effect March
1, 1998.
SEC. 102. IMPROVING TRAVEL MANAGEMENT.
(a) LIMITED EXCLUSION FROM REQUIREMENT RE-
GARDING OCCUPATION OF QUARTERS.—Section 5911(e)
of title 5, United States Code, is amended by adding at
the end the following new sentence: ‘‘The preceding sen-
tence shall not apply with respect to lodging provided
under chapter 57 of this title.’’.
(b) USE
OF
TRAVEL
MANAGEMENT
CENTERS,
AGENTS, AND ELECTRONIC PAYMENT SYSTEMS.—
(1) REQUIREMENT TO ENCOURAGE USE.—The
head of each executive agency shall, with respect to
travel by employees of the agency in the perform-
ance of the employment duties by the employee, re-
quire, to the extent practicable, the use by such em-
ployees of travel management centers, travel agents
authorized for use by such employees, and electronic
reservation and payment systems for the purpose of
improving efficiency and economy regarding travel
by employees of the agency.
(2) PLAN FOR IMPLEMENTATION.—(A) The Ad-
ministrator of General Services shall develop a plan
regarding the implementation of this subsection and
shall, after consultation with the heads of executive
agencies, submit to Congress a report describing
such plan and the means by which such agency
heads plan to ensure that employees use travel man-
agement centers, travel agents, and electronic res-
ervation and payment systems as required by this
subsection.
(B) The Administrator shall submit the plan re-
quired under subparagraph (A) not later than March
31, 1999.
(c) PAYMENT
OF STATE
AND LOCAL TAXES
ON
TRAVEL EXPENSES.—
(1) IN GENERAL.—The Administrator of Gen-
eral Services shall ensure that employees of execu-
tive agencies are not inappropriately charged State
and local taxes on travel expenses, including trans-
portation, lodging, automobile rental, and other mis-
cellaneous travel expenses.
(2) REPORT.—Not later than March 31, 1999,
the Administrator shall, after consultation with the
heads of executive agencies, submit to Congress a
report describing the steps taken, and proposed to
be taken, to carry out this subsection.
TITLE II—IMPROVING FEDERAL
DEBT COLLECTION PRACTICES
SEC. 201. MISCELLANEOUS TECHNICAL CORRECTIONS TO
SUBCHAPTER II OF CHAPTER 37 OF TITLE 31,
UNITED STATES CODE.
(a) 
CHILD
SUPPORT
ENFORCEMENT.—Section
3716(h)(3) of title 31, United States Code, is amended
to read as follows:
‘‘(3) In applying this subsection with respect to
any debt owed to a State, other than past due sup-
port being enforced by the State, subsection
(c)(3)(A) shall not apply.’’.
(b) DEBT SALES.—Section 3711 of title 31, United
States Code, is amended by striking subsection (i).
(c) GAINSHARING.—Section 3720C(b)(2)(D) of title
31, United States Code, is amended by striking ‘‘delin-
quent loans’’ and inserting ‘‘debts’’.
(d) PROVISIONS RELATING TO PRIVATE COLLECTION
CONTRACTORS.—
(1) COLLECTION
BY
SECRETARY
OF
THE
TREASURY.—Section 3711(g) of title 31, United
States Code, is further amended by adding at the
end the following:
‘‘(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 re-
ceived 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 that the
contractor shall be subject to penalties under the
contract—
‘‘(i) if the contractor fails to comply with any
restrictions under applicable law regarding the col-
lection 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 con-
nection with efforts to collect a debt pursuant to a con-
tract under this subsection by reason of actions that are
required by the contract or by applicable law or regula-
tions.
‘‘(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 col-
lection services, the Secretary of the Treasury shall evalu-
ate bids received through a methodology that considers the
bidder’s prior performance in terms of net amounts col-
lected under government collection contracts of similar
size, if applicable. The frequency of valid debtor com-
plaints shall also be considered in the evaluation criteria.’’.
(2) COLLECTION BY PROGRAM AGENCY.—Sec-
tion 3718 of title 31, United States Code, is further
amended by adding at the end the following:
‘‘(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 current place of employment
of the debtor, the location of the payroll office of the debt-
or’s current employer, the period the debtor has been em-
ployed by the current employer of the debtor, and the com-
pensation received by the debtor from the current em-
ployer of the debtor.
‘‘(i)(1) The head of an executive, judicial, or legisla-
tive agency that contracts with a private collection con-
tractor 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—
‘‘(A) shall be subject to penalties under the con-
tract if the contractor fails to comply with any re-
strictions imposed under applicable law on the collec-
tion activities of debt collectors; and
‘‘(B) shall be subject to penalties under the
contract 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 connec-
tion with efforts to collect a debt owed to an executive,
judicial, or legislative agency, or owed under any loan pro-
gram 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 contrac-
tor’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 col-
lection services, the head of an executive, judicial, or legis-
lative agency shall evaluate bids received through a meth-
odology that considers the bidder’s prior performance in
terms of net amounts collected under government collec-
tion contracts of similar size, if applicable. The frequency
of valid debtor complaints shall also be considered in the
evaluation criteria.’’.
(3) CONSTRUCTION.—None of the amendments
made by this subsection shall be construed as alter-
ing or superseding the provisions in section 362 of
title 11, United States Code or section 6103 of the
Internal Revenue Code of 1986.
(e) CLERICAL AMENDMENT.—Section 3720A(h) of
title 31, United States Code, is amended—
(1) beginning in paragraph (3), by striking the
close quotation marks and all that follows through
the matter preceding subsection (i); and
(2) by adding at the end the following:
‘‘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.’’.
(f) CORRECTION
OF REFERENCES
TO FEDERAL
AGENCY.—(1) Sections 3716(c)(6) and 3720A(a), (b), (c),
and (e) of title 31, United States Code, are each amended
by striking ‘‘Federal agency’’ each place it appears and
inserting ‘‘executive, judicial, or legislative agency’’.
(2) Section 3716(h)(2)(C), of title 31, United States
Code, is amended by striking ‘‘a Federal agency’’ and in-
serting ‘‘an executive, judicial, or legislative agency’’.
(g) CLARIFICATION OF INAPPLICABILITY OF ACT TO
CERTAIN AGENCIES.—Notwithstanding any other provi-
sion of law, no provision in this Act, the Debt Collection
Improvement Act of 1996 (chapter 10 of title III of Public
Law 104–134; 31 U.S.C. 3701 note), chapter 37 or sub-
chapter II of chapter 33 of title 31, United States Code,
or any amendments made by such Acts or any regulations
issued thereunder, shall apply to activities carried out pur-
suant to a law enacted to protect, operate, and administer
any deposit insurance funds, including the resolution and
liquidation of failed or failing insured depository institu-
tions.
(h) CONTRACTS FOR COLLECTION SERVICES.—Sec-
tion 3718 of title 31, United States Code, is amended—
(1) in the first sentence of subsection (b)(1)(A),
by inserting ‘‘, or any monetary claim, including any
claims for civil fines or penalties, asserted by the At-
torney General’’ before the period;
(2) in the third sentence of subsection
(b)(1)(A)—
(A) by inserting ‘‘or in connection with
other monetary claims’’ after ‘‘collection of
claims of indebtedness’’;
(B) by inserting ‘‘or claim’’ after ‘‘the in-
debtedness’’; and
(C) by inserting ‘‘or other person’’ after
‘‘the debtor’’; and
(3) in subsection (d), by inserting ‘‘or any other
monetary claim of’’ after ‘‘indebtedness owed’’.
SEC. 202. BARRING DELINQUENT FEDERAL DEBTORS FROM
OBTAINING FEDERAL BENEFITS.
(a) IN GENERAL.—Section 3720B of title 31, United
States Code, is amended to read as follows:
‘‘§ 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 legis-
lative agency, as determined under standards prescribed
by the Secretary of the Treasury. Such a person may ob-
tain 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 legisla-
tive 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 para-
graph (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 re-
delegate 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 Rev-
enue Code of 1986 or the Tariff Act of 1930.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 37 of title 31, United States
Code, is amended by striking the item relating to section
3720B and inserting the following:
‘‘3720B. Barring delinquent Federal debtors from obtaining Federal benefits.’’.
(c) CONSTRUCTION.—The amendment made by this
section shall not be construed as altering or superseding
the provisions in section 525 of title 11, United States
Code.
SEC. 203. COLLECTION AND COMPROMISE OF NONTAX
DEBTS AND CLAIMS.
(a) USE OF PRIVATE COLLECTION CONTRACTORS
AND FEDERAL DEBT COLLECTION CENTERS.—Para-
graph (5) of section 3711(g) of title 31, United States
Code, is amended to read as follows:
‘‘(5)(A) Nontax debts referred or transferred under
this subsection shall be serviced, collected, or com-
promised, or collection action thereon suspended or termi-
nated, 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 promptly;
‘‘(iii) maintain competition between private col-
lection contractors;
‘‘(iv) ensure, to the maximum extent prac-
ticable, that a private collection contractor to which
a nontax debt is referred is responsible for any ad-
ministrative 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.’’.
(b) LIMITATION ON DISCHARGE BEFORE USE OF
PRIVATE COLLECTION CONTRACTOR OR DEBT COLLEC-
TION CENTER.—Paragraph (9) of section 3711(g) of title
31, United States Code, is amended—
(1) by redesignating subparagraphs (A) through
(H) as clauses (i) through (viii);
(2) by inserting ‘‘(A)’’ after ‘‘(9)’’;
(3) in subparagraph (A) (as designated by
paragraph (2) of this subsection) in the matter pre-
ceding clause (i) (as designated by paragraph (1) of
this subsection), by inserting ‘‘and subject to sub-
paragraph (B)’’ after ‘‘as applicable’’; and
(4) by adding at the end the following:
‘‘(B)(i) The head of an executive, judicial, or legisla-
tive 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 collec-
tion 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.’’.
TITLE 
III—SALE 
OF 
NONTAX
DEBTS 
OWED 
TO 
UNITED
STATES
SEC. 301. AUTHORITY TO SELL NONTAX DEBTS.
(a) PURPOSE.—The purpose of this section is to pro-
vide that the head of each executive, judicial, or legislative
agency shall establish a program of nontax debt sales in
order to—
(1) minimize the loan and nontax debt port-
folios of the agency;
(2) improve credit management while serving
public needs;
(3) reduce delinquent nontax debts held by the
agency;
(4) obtain the maximum value for loan and
nontax debt assets; and
(5) obtain valid data on the amount of the Fed-
eral subsidy inherent in loan programs conducted
pursuant to the Federal Credit Reform Act of 1990
(Public Law 93–344).
(b) SALES AUTHORIZED.—(1) The head of an execu-
tive, judicial, or legislative agency may sell, subject to sec-
tion 504(b) of the Federal Credit Reform Act of 1990 (2
U.S.C. 661c(b)) and using competitive procedures, any
nontax debt owed to the United States that is adminis-
tered by the agency.
(2) Costs the agency incurs in selling nontax debt
pursuant to this section may be deducted from the pro-
ceeds received from the sale. Such costs may include, but
are not limited to—
(A) the costs of any contract for identification,
billing, or collection services;
(B) the costs of contractors assisting in the sale
of nontax debt;
(C) the fees of appraisers, auctioneers, and re-
alty brokers;
(D) the costs of advertising and surveying; and
(E) other reasonable costs incurred by the
agency.
(3) Sales of nontax debt under this section—
(A) shall be for—
(i) cash; or
(ii) cash and a residuary equity, joint ven-
ture, or profit participation, if the head of the
agency, in consultation with the Director of the
Office of Management and Budget and the Sec-
retary of the Treasury, determines that the pro-
ceeds will be greater than the proceeds from a
sale solely for cash;
(B) shall be without recourse against the
United States, but may include the use of guaran-
tees if otherwise authorized by law; and
(C) shall transfer to the purchaser all rights of
the United States to demand payment of the nontax
debt, other than with respect to a residuary equity,
joint venture, or profit participation under subpara-
graph (A)(ii).
(c) EXISTING AUTHORITY NOT AFFECTED.—This
section is not intended to limit existing statutory authority
of the head of an executive, judicial, or legislative agency
to sell loans, nontax debts, or other assets.
SEC. 302. REQUIREMENT TO SELL CERTAIN NONTAX
DEBTS.
(a) SALE OF DELINQUENT LOANS.—The head of
each executive, judicial, or legislative agency shall sell any
nontax loan owed to the United States by the later of—
(1) the date on which the nontax debt becomes
24 months delinquent; or
(2) 24 months after referral of the nontax debt
to the Secretary of the Treasury pursuant to section
3711(g)(1) of title 31, United States Code. Sales
under this subsection shall be conducted under the
authority in section 301.