31 U.S.C. § 3718 — Contracts for collection services
submitted 43 years ago by Pub. L. 97-452 to r/title-31-MONEY-AND-FINANCE · 1,378 words · no verdicts yet
This section allows government agencies to hire collection services or private lawyers to recover government debts and assets. It sets rules for those contracts, reporting, fees, funding, and oversight. It does not apply to debts collected under the Internal Revenue Code of 1986.
(a) The head of an executive, judicial, or legislative agency may, under conditions that the agency head considers appropriate, contract with a person to collect debts owed to the United States Government or to find or recover government assets. The agency head may not use such a contract to find or recover United States assets held by a State government or financial institution unless the agency has procedures approved by the Secretary of the Treasury for identifying and recovering those assets.
The contract must say that: (1) the agency head keeps the power to resolve a dispute, compromise a claim*, stop collection, and refer a matter to the Attorney General for a civil lawsuit; and (2) the person is subject to (A) section 552a of title 5, to the extent section 552a(m) provides, and (B) United States and State laws and regulations about debt*-collection practices. This section does not define the quoted term “debt-collection practices.”
(b)(1)(A) The Attorney General may contract with private lawyers to provide legal services for any debt claim owed to the United States. The services may include negotiating, compromising, settling, and litigating the claim. Each contract must contain terms the Attorney General considers necessary and appropriate, including the fee or a way to calculate it. The fee may not be more than what lawyers in private practice in the area where the services are provided typically charge for collecting debt claims. In deciding the amount, the Attorney General must consider the debt’s amount, age, and nature, and whether the debtor is an individual or a business. This authority does not remove the Attorney General’s duty to follow the competition requirements in division C of subtitle I of title 41, except sections 3302, 3501(b), 3509, 3906, 4710, and 4711. This section does not define the quoted terms “private practice of law,” “debt claims,” or “business.”
(B) The Attorney General must make the best effort to contract with law firms owned and controlled by socially and economically disadvantaged individuals and with qualified HUBZone small business concerns, as defined in section 31(b) of the Small Business Act. This is intended to let each agency meet paragraph (3). This section does not define the quoted term “socially and economically disadvantaged individuals.”
(2) With the Attorney General’s approval, the head of an executive, judicial, or legislative agency may refer to a private lawyer hired under paragraph (1) debt claims arising from that agency’s activities.
(3) Each agency must make the best effort to ensure that at least 10 percent of the total amounts of claims it refers to private lawyers under paragraph (2) go to law firms owned and controlled by socially and economically disadvantaged individuals and to qualified HUBZone small business concerns. For this paragraph, (A) “law firm owned and controlled by socially and economically disadvantaged individuals” means a law firm meeting the requirements in section 8(d)(3)(C)(i) and (ii) of the Small Business Act and regulations issued under those clauses; (B) “socially and economically disadvantaged individuals” are presumed to include the groups and individuals described in the last paragraph of section 8(d)(3)(C) of that Act; and (C) “qualified HUBZone small business concern” has the meaning given in section 31(b) of that Act. This section does not otherwise define the quoted terms.
(4) Even though sections 516, 518(b), 519, and 547(2) of title 28 provide otherwise, a private lawyer hired under paragraph (1) may represent the United States in litigation connected with legal services provided under that lawyer’s contract.
(5) A contract with a private lawyer under paragraph (1) must include: (A) a provision allowing the Attorney General to end the contract or end the lawyer’s representation of the United States in particular cases if the Attorney General finds that doing so is convenient for the Government; (B) a provision saying that the head of the executive or legislative agency referring a claim keeps the power to resolve a dispute about the claim, compromise it, or end collection on it; and (C) a provision requiring the lawyer to send the Attorney General and the head of the executive or legislative agency referring the claim a monthly report about services provided for the claim during that month and progress in collecting the claim.
(6) Despite the fourth sentence of section 803(6) of the Fair Debt Collection Practices Act, a private lawyer providing legal services under a contract made under paragraph (1) is considered a “debt collector” for that Act. This section does not define the quoted term.
(7) A counterclaim in a lawsuit brought for the United States by a private lawyer under this subsection to recover a government debt may not be asserted unless it is served directly on the Attorney General or the United States Attorney for the judicial district where the lawsuit is brought or that includes the place where it is brought. The service must follow the court’s procedural rules.
(c) The Attorney General must send Congress an annual report about Department of Justice activities to recover government debts referred to the Department for collection. For each agency, the report must list: (1) the total number and amount of claims referred for legal services to the Department and to private lawyers under subsection (b) during the reporting year; (2) the total number and amount of those claims referred to the Department that were collected, not collected, or otherwise resolved during that year; and (3) the total number and amount of claims referred to private lawyers under subsection (b) that (A) were collected, not collected, or otherwise resolved during that year; (B) were not collected or otherwise resolved under a contract the Attorney General ended during that year; and (C) had the private lawyer’s representation ended by the Attorney General during that year without ending the contract under which the claims were referred.
(d) Despite section 3302(b) of this title, a contract under subsection (a) or (b) may provide that a person’s fee for collecting government debt or finding or recovering government assets is paid from the amount recovered.
(e) A contract under subsection (a) or (b) is effective only to the extent and in the amount provided by an appropriations law. This limit does not apply when the contract authorizes a person to collect a fee as subsection (d) allows.
(f) This section does not apply to collecting debts under the Internal Revenue Code of 1986.
(g) To help Congress decide whether private lawyers are a cost-effective way to collect government debts, the Attorney General, after consulting the Government Accountability Office, must keep statistical data comparing the costs of collection by participating United States Attorneys’ Offices and private lawyers. The Attorney General must make that data available to the Inspector General of the Department of Justice.
Under conditions the head of an executive, judicial, or legislative agency considers appropriate, the head of the agency may enter into a contract with a person for collection service to recover indebtedness owed, or to locate or recover assets of, the United States Government. The head of an agency may not enter into a contract under the preceding sentence to locate or recover assets of the United States held by a State government or financial institution unless that agency has established procedures approved by the Secretary of the Treasury to identify and recover such assets. The contract shall provide that—
the head of the agency retains the authority to resolve a dispute, compromise a claim*, end collection action, and refer a matter to the Attorney General to bring a civil action; and
the person is subject to—
section 552a of title 5, to the extent provided in section 552a(m); and
laws and regulations of the United States Government and State governments related to debt* collection practices.
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 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, as determined by the Attorney General, considering the amount, age, and nature of the indebtedness and whether the debtor is an individual or a business entity. Nothing in this subparagraph shall relieve the Attorney General of the competition requirements set forth in division C (except sections 3302, 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41.
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 and law firms that are qualified HUBZone small business concerns (as defined in section 31(b) of the Small Business Act), so as to enable each agency to comply with paragraph (3).
The head of an executive, judicial, or legislative agency may, subject to the approval of the Attorney General, refer to a private counsel retained under paragraph (1) of this subsection claims of indebtedness owed the United States arising out of activities of that agency.
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 and law firms that are qualified HUBZone small business concerns. For purposes of this paragraph—
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(d)(3)(C) of the Small Business Act (15 U.S.C. 637(d)(3)(C)(i) and (ii)) and regulations issued under those clauses;
“socially and economically disadvantaged individuals” shall be presumed to include these 1 groups and individuals described in the last paragraph of section 8(d)(3)(C) of the Small Business Act; and
the term “qualified HUBZone small business concern” has the meaning given that term in section 31(b) of the Small Business Act.
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.
A contract made with a private counsel under paragraph (1) of this subsection shall include—
a provision permitting the Attorney General to terminate 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;
a provision stating that the head of the executive or 2 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
a provision requiring the private counsel to transmit monthly to the Attorney General and the head of the executive or 2 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.
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.
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.
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 the Department of Justice for collection. Each such report shall include a list, by agency, of—
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;
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
the total number and amount of those claims referred for legal services to private counsel under subsection (b)—
which were collected or were not collected or otherwise resolved during the 1-year period covered by the report;
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
on which the Attorney General terminated the private counsel’s representation during the 1-year period covered by the report without terminating the contract with the private counsel under which the claims were referred.
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 to locate or recover assets of, the United States Government is payable from the amount recovered.
A contract under subsection (a) or (b) of this section is effective only to the extent and in the amount provided in an appropriation law. This limitation does not apply in the case of a contract that authorizes a person to collect a fee as provided in subsection (d) of this section.
This section does not apply to the collection of debts under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).
In order to assist Congress in determining whether use of private counsel is a cost-effective method of collecting Government debts, the Attorney General shall, following consultation with the Government Accountability Office, maintain and make available to the Inspector General of the Department of Justice, statistical data relating to the comparative costs of debt collection by participating United States Attorneys’ Offices and by private counsel.
Source credit: (Added Pub. L. 97–452, § 1(16)(A), Jan. 12, 1983, 96 Stat. 2473; amended Pub. L. 98–167, Nov. 29, 1983, 97 Stat. 1104; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 99–578, § 1, Oct. 28, 1986, 100 Stat. 3305; Pub. L. 102–589, § 6, Nov. 10, 1992, 106 Stat. 5135; Pub. L. 103–272, § 4(f)(1)(M), July 5, 1994, 108 Stat. 1362; Pub. L. 104–134, title III, § 31001(c)(1), (l), (cc)(1), Apr. 26, 1996, 110 Stat. 1321–359, 1321–366, 1321–380; Pub. L. 105–135, title VI, § 604(e)(1), Dec. 2, 1997, 111 Stat. 2633; Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814; Pub. L. 111–350, § 5(h)(6), Jan. 4, 2011, 124 Stat. 3849; Pub. L. 115–91, div. A, title XVII, § 1701(a)(4)(E), Dec. 12, 2017, 131 Stat. 1796.)
- 1983Enacted · Pub. L. 97-452 · 96 Stat. 2473
- 1983Amended · Pub. L. 98-167 · 97 Stat. 1104
- 1986Amended · Pub. L. 99-514 · 100 Stat. 2095
- 1986Amended · Pub. L. 99-578 · 100 Stat. 3305
- 1992Amended · Pub. L. 102-589 · 106 Stat. 5135
- 1994Amended · Pub. L. 103-272 · 108 Stat. 1362
- 1996Amended · Pub. L. 104-134 · 110 Stat. 1321
- 1997Amended · Pub. L. 105-135 · 111 Stat. 2633
- 2004Amended · Pub. L. 108-271 · 118 Stat. 814
- 2011Amended · Pub. L. 111-350 · 124 Stat. 3849
- 2017Amended · Pub. L. 115-91 · 131 Stat. 1796
A history note hasn’t been published yet. The record shows enactment by Pub. L. 97-452 on 1983-01-12.
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