Federal Debt Recovery Act of 1985
PL 99-578 (S.209), enacted 10/28/1986

PUBLIC LAW 99-578—OCT. 28, 1986 
100 STAT. 3305 
Public Law 99-578 
99th Congress 
An Act 
To amend section 3718 of title 31, United States Code, to authorize contracts 
retaining private counsel to furnish legal services in the case of indebtedness owed 
the United States. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. CONTRACTS FOR CERTAIN LEGAL SERVICES. 
Section 3718 of title 31, United States Code, is amended— 
(1) by redesignating subsections (b), (c), and (d) as subsections 
(d), (e), and (0, respectively; 
(2) in subsection (d), as redesignated by paragraph (1), by 
inserting "or (b)" after "subsection (a)"; 
(3) in subsection (e), as redesignated by paragraph (1)— 
(A) by striking out "(b)" and inserting in lieu thereof 
"(d)"; and 
(B) by inserting "or (b)" after "(a)"; and 
(4) by inserting after subsection (a) the following new 
subsections: 
"(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. Each such con-
tract 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, as determined by the Attor-
ney General, considering the amount, age, and nature of the indebt-
edness and whether the debtor is an individual or a business entity. 
If the Attorney General makes a contract for legal services to be 
furnished in any judicial district of the United States under the first 
sentence of this paragraph, the Attorney General shall use his best 
efforts to obtain, from among attorneys regularly engaged in the 
private practice of law in such district, at least four such contracts 
for legal services with private individuals or firms in such district. 
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). 
"(B) The Attorney General shall use his best efforts to enter into 
contracts under this paragraph with law firms owned and controlled 
by socially and economically disadvantaged individuals, so as to 
enable each agency to comply with paragraph (3). 
Oct. 28, 1986 
[S. 209] 
Claims. 
Disadvantaged 
persons. 
100 STAT. 3306 
PUBLIC LAW 99-578—OCT. 28, 1986 
Claims. 
Claims. 
Disadvantaged 
persons. 
15 u s e 637. 
Claims. 
Reports 
Claims. 
Ante, p. 768. 
Claims. 
Reports. 
Claims. 
"(2) The head of an executive or legislative agency may, subject to 
the approval of the Attorney (General, refer to a private counsel 
retaineid under paragraph (1) of this subsection claims of indebted-
ness owed the United States arising out of activities of that agency. 
"(3) Each agency shall use its best efforts to assure that not less 
than 10 percent of the amounts of all claims referred to private 
counsel by that agency under paragraph (2) are referred to law firms 
owned and controlled by socially and economically disadvantaged 
individuals. For purposes of this paragraph— 
"(A) the term 'law firm owned and controlled by socially and 
economically disadvantaged individuals' means a law firm that 
meets the requirements set forth in clauses (i) and (ii) of section 
8(dX3XC) of the Small Business Act (15 U.S.C. 6376(dX3XC) (i) and 
(ii)) and regulations issued under those clauses; and 
"(B) 'socially and economically disadvantaged individuals' 
shall be presumed to include these groups and individuals 
described in the last paragraph of section 8(dX3XC) of the Small 
Business A.ct 
"(4) Notwithstanding sections 516, 518(b), 519, and 547(2) of title 
28, a private counsel retained under paragraph (1) of this subsection 
may represent the United States in litigation in connection with 
legal services furnished pursuant to the contract entered into with 
that counsel under paragraph (1) of this subsection. 
"(5) A contract made with a private counsel under paragraph (1) of 
this subsection shall include— 
"(A) a provision permitting the Attorney General to termi-
nate either the contract or the private counsel's representation 
of the United States in particular cases if the Attorney General 
finds that such action is for the convenience of the Government; 
"(B) a provision stating that the head of the executive or 
legislative agency which refers a claim under the contract 
retains the authority to resolve a dispute regarding the claim, to 
compromise the claim, or to terminate a collection action on the 
claim; and 
"(C) a provision requiring the private counsel to transmit 
monthly to the Attorney General and the head of the executive 
or legislative agency referring a claim under the contract a 
report on the services relating to the claim rendered under the 
contract during the month and the progress made during the 
month in collecting the claim under the contract. 
"(6) Notwithstanding the fourth sentence of section 803(6) of the 
Fair Debt Collection Practices Act (15 U.S.C. 1692a(6)), a private 
counsel performing legal services pursuant to a contract made 
under paragraph (1) of this subsection shall be considered to be a 
debt collector for the purposes of such Act. 
"(7) Any counterclaim filed in any action to recover indebtedness 
owed the United States which is brought on behalf of the United 
States by private counsel retained under this subsection may not be 
asserted unless the counterclaim is served directly on the Attorney 
General or the United States Attorney for the judicial district in 
which, or embracing the place in which, the action is brought. Such 
service shall be made in accordance with the rules of procedure of 
the court in which the action is brought. 
"(c) The Attorney General shall transmit to the Congress an 
annual report on the activities of the Department of Justice to 
recover indebtedness owed the United States which was referred to 
PUBLIC LAW 99-578—OCT. 28, 1986 
100 STAT. 3307 
the Department of Justice for collection. Each such report shall 
include a list, by agency, of— 
"(1) the total number and amounts of claims which were 
referred for legal services to the Department of Justice and to 
private counsel under subsection (b) during the 1-year period 
covered by the report; 
"(2) the total number and amount of those claims referred for 
legal services to the Department of Justice which were collected 
or were not collected or otherwise resolved during the 1-year 
period covered by the report; and 
"(3) the total number and amount of those claims referred for 
legal services to private counsel under subsection 0>)— 
"(A) which were collected or were not collected or other-
wise resolved during the 1-year period covered by the 
report; 
"(B) which were not collected or otherwise resolved under 
a contract terminated by the Attorney General during the 
1-year period covered by the report; and 
"(C) on which the Attorney General terminated the pri-
vate counsel's representation during the 1-year period cov-
ered by the report without terminating the contract with 
the private counsel under which the claims were referred.". 
SEC. 2. REPORT BY ATTORNEY GENERAL. 
31 USC 3718 
Not later than 180 days after the date of the enactment of this 
Act, the Attorney General of the United States shall transmit to the 
Congress a report on the actions taken under section 37180t)) of title 
31, United States Code (as added by section 1 of this Act). 
SEC. 3. PILOT PROGRAM. 
31 USC 3718 
The Attorney General shall carry out subsections O
t
>
) and (c) of 
section 3718 of title 31, United States Code (as added by section 1 of 
this Act), through a pilot program in each of at least 5 and not more 
thn 10 judicial districts selected by the Attorney General. 
SEC. 4. REGULATIONS. 
31 USC 3718 
The Attorney General shall issue regulations to carry out this Act 
and the amendments made by section 1 of this Act. The Attorney 
General shall submit the regulations to the Congress at leeist 60 days 
before they become effective. 
SEC. 5. TERMINATION. 
31 USC 3718 
This Act and the amendments made by section 1 of this Act shall 
be in effect for a period of three years, beginning on the date on 
which regulations become effective under section 4. 
SEC. 6. AUDIT BY COMPTROLLER GENERAL. 
31 USC 3718 
(a) CONTENTS OF AUDIT.—The Comptroller General of the United 
States shall, at the end of the 3-year period referred to in section 5, 
conduct an audit of the actions of the Attorney General under 
subsection Ot)) of section 3718 of title 31, United States Code (as 
added by section 1 of this Act), under the pilot program referred to 
in section 3. The Comptroller General shall determine the extent of 
the competition among private counsel to obtain contracts awarded 
under such subsection, the reasonableness of the fees provided in 
such contracts, the diligence and efforts of the Attorney General to 
retain private counsel in accordance with the provisions of such 
100 STAT. 3308 
PUBLIC LAW 99-578—OCT. 28, 1986 
subsection, and the results of the debt collection efforts of private 
counsel retained under such contracts. 
(b) REPORT TO CONGRESS.—After completing the audit under 
subsection (a), the Comptroller General shall transmit to the Con-
gress a report on the findings and conclusions resulting from the 
audit. 
' Approved October 28, 1986. 
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LEGISLATIVE HISTORY—S. 209 (H.R. 5541): 
HOUSE REPORTS: No. 99-909 accompanying H.R. 5541 (Comm. on the Judiciary). 
SENATE REPORTS: No. 99-256 (Comm. on Governmental Affairs). 
CONGRESSIONAL RECORD, Vol. 132 (1986): 
Mar. 19, considered and passed Senate. 
Sept. 29, H.R. 5541 considered and passed House; proceedings vacated and S. 209, 
amended, passed in lieu. 
Oct. 8, Senate concurred in House amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 22 (1986): 
Oct. 28, Presidential statement.