Department of Justice STATEMENT OF WILLIAM TYSON DIRECTOR BEFORE THE COMMITTEE ON GOVERNMENTAL AFFAIRS SUBCOMMITTEE ON ENERGY, NUCLEAR PROLIFERATION AND GOVERNMENT PROCESSES UNITED STATES SENATE CONCERNING DEBT COLLECTIONS ON APRIL 12, 1984 Mr. Chairman, thank you for the opportunity to appear before this committee and to respond to your questions concerning the debt collection activities of the Department of Justice. At the outset, I would like to offer a very ief overview of the current procedures followed by the Department of Justice in the area of debt collection, and identify a few aspects of our debt collection program which reflect the improvements made by the Department and the U.S. Attorneys over the last few years. From the beginning, this Administration and Attorney General Smith have been intent upon reducing the amount of debt currently past due and owing to the Federal Government. To further this objective, each federal agency has been imbued with an increased awareness of their obligation to collect on overdue obligations and most agencies have tightened their procedures for the handling of past-due claims. To provide assistance and guidance to the divers federal agencies in the collection of their past-due claims and accounts, the Department has worked closely with the General Accounting Office over the past year to revise the Federal claims Collection Standards. The revisions were recently published in the Federal Register (March 9, 1984, Pederal Register, vol. 49, No. 48, p. 8889, et. seg.) These Standards recognize that the principal Government-wide debt collection effort must be carried out by the agency which administers the individual programs, and that referral of claims to GAO or to this Department for litigation and enforced collection is made, absent exigent circumstances, only when the administering agency has exhausted all available administrative collection remedies. The se Standards provide, in effect, a checklist of administrative collection remedies which should be timely pursued by the agency "holding" the debts or claims. One important feature of the revised Standards is that it incorporates a new uniform claims collection Litigation Report which is to be used by all Federal agencies when they refer claims to the Department or a U.S. Attorney for litigation. It had been our experience, Mr. Chairman, that many Federal agencies referred their claims to us for litigation after giving only slight regard to the information needed to conduct successful litigation. For instance, as many as 25% of certain categories of referrals came to us without current residence addresses for the debtor, or with little information concerning the debtor's resources. In this regard, I would like to make one very important point. The historical relationship between Department and its many "client agencies" is one of a barrister to his client--this is the relationship recognized by statute and the Federal Claims collections Standards. Essentially, the client agency who administers the program is primarily responsible for making the loan and following through on the repayment of that loan. Only after the agency has pursued, without success, all its available alternatives to collect on an overdue loan, is the matter referred to the Department of Justice for litigation. In essence, the cases referred to this Department are those loans which were low risks initially, were not in any better posture when they came due, and were the subject of an unsuccessful collection effort by the administering agency. It is important to keep this point in mind as we review the Department's debt collection efforts, because the Department and U.S. Attorneys are not now staffed, nor have they ever been, to perform what are referred to as "debt collection services;" particularly if those "services" are administrative in nature, as opposed to litigation. In other words, Mr. Chairman, the Department and U.S. Attorneys appropriately get only those claims in which the debtor is demonstrably reluctant and recalcitrant. Given that we take on our client agencies' bad risks, we believe the Department has responded exceptionally well to this Administration's charge to do a better job at debt collection. Debt collection activities are no longer considered a low priority program, and nowhere is this more apparent than in the United States Attorneys' offices. In the last three years, the 94 United States Attorneys' offices, which are responsible for substantially all of the Department's debt collection activity, and the Executive Office for United States Attorneys have altered their focus to make debt collection one of the highest priority programs. This effort and change of focus has produced results. The proof of this is found in the current data reflecting our cash collections over the last two years. Cash recoveries in fiscal year 1983 exceeded the recoveries in fiscal year 1982 by approximately 50 mill on dollars. The actual figures are $ 201,590,995 as compared to $151,568,794, or a 33% increase. We are constantly endeavoring to improve on the results achieved thus far, and maintain a close eye on our cash collection figures so that we can assess the effectiveness of our debt collection effort on a continuing basis. For example, cash collections for the 12 months ending February 29 of this year were $222, 480,883. When compared to $171,835,429 for the 12 months ending February 28, 1983, this amounts to an increase of 29.47%. Our projections through the end of this fiscal year are that cash collections for fiscal year 1984 will exceed those of fiscal year 1983 by about the same amount by which fiscal year 1983 cash collections exceeded those of fiscal year 1982. Cumulatively, this will mean a two-year improvement of 40%. Because of a change in accounting methods, comparisons with fiscal year 1981 lack the precision of comparisons between later fiscal years. We are confident, nevertheless, that when compared to fiscal year 1981, the cash recoveries for fiscal year 1983 amount to a respectable 50% increase. By changing our focus in this Administration in a rather abrupt fashion, it was necessary to make some initial priority |