
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 31USC3718]

 
                       TITLE 31--MONEY AND FINANCE
 
                   SUBTITLE III--FINANCIAL MANAGEMENT
 
                           CHAPTER 37--CLAIMS
 
          SUBCHAPTER II--CLAIMS OF THE UNITED STATES GOVERNMENT
 
Sec. 3718. Contracts for collection services

    (a) 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--
        (1) 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
        (2) the person is subject to--
            (A) section 552a of title 5, to the extent provided in 
        section 552a(m); and
            (B) laws and regulations of the United States Government and 
        State governments related to debt collection practices.

    (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 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 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 and law firms that 
are qualified HUBZone small business concerns (as defined in section 
3(p) of the Small Business Act), so as to enable each agency to comply 
with paragraph (3).
    (2) 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.
    (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 and 
law firms that are qualified HUBZone small business concerns. 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(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;
        (B) ``socially and economically disadvantaged individuals'' 
    shall be presumed to include these groups and individuals described 
    in the last paragraph of section 8(d)(3)(C) of the Small Business 
    Act; and
        (C) the term ``qualified HUBZone small business concern'' has 
    the meaning given that term in section 3(p) of the Small Business 
    Act.

    (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 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;
        (B) a provision stating that the head of the executive or \1\ 
    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
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``, judicial, or''.
---------------------------------------------------------------------------
        (C) a provision requiring the private counsel to transmit 
    monthly to the Attorney General and the head of the executive or \1\ 
    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 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 (b)--
            (A) which were collected or were not collected or otherwise 
        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 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.

    (d) 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.
    (e) 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.
    (f) This section does not apply to the collection of debts under the 
Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).
    (g) 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 
General Accounting 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.

(Added Pub. L. 97-452, Sec. 1(16)(A), Jan. 12, 1983, 96 Stat. 2473; 
amended Pub. L. 98-167, Nov. 29, 1983, 97 Stat. 1104; Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 99-578, Sec. 1, Oct. 28, 
1986, 100 Stat. 3305; Pub. L. 102-589, Sec. 6, Nov. 10, 1992, 106 Stat. 
5135; Pub. L. 103-272, Sec. 4(f)(1)(M), July 5, 1994, 108 Stat. 1362; 
Pub. L. 104-134, title III, Sec. 31001(c)(1), (l), (cc)(1), Apr. 26, 
1996, 110 Stat. 1321-359, 1321-366, 1321-380; Pub. L. 105-135, title VI, 
Sec. 604(e)(1), Dec. 2, 1997, 111 Stat. 2633.)

                                          Historical and Revision Notes
-------------------------------------------------------------------------------
---------------------------------
           Revised Section                   Source (U.S. Code)                
Source (Statutes at Large)
-------------------------------------------------------------------------------
---------------------------------
3718(a)..............................  31 App.:952(f)(1) (1st          July 19,
 1966, Pub. L. 89-508, 80 Stat.
                                        sentence words after 2d         308, Se
c.  3(f); added Oct. 25, 1982,
                                        comma, last sentence).          Pub. L.
 97-365, Sec.  13(b), 96 Stat.
                                                                        1757.
3718(b)..............................  31 App.:952(f)(2).
3718(c)..............................  31 App.:952(f)(3).
3718(d)..............................  31 App.:952(f)(1) (1st
                                        sentence words before 2d
                                        comma).
-------------------------------------------------------------------------------
---------------------------------

    In subsections (a) and (b), the word ``Government'' is added for 
consistency in the revised title and with other titles of the United 
States Code.
    In subsection (a), before clause (1), the words ``terms and'' are 
omitted as surplus. The words ``or organization'' are omitted because of 
1:1. In clause (1), the words ``bring a civil action'' are substituted 
for ``initiate legal action'' for consistency in the revised title and 
with other titles of the Code. In clause (2)(B), the words ``including 
the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.)'' are 
omitted as being included in ``laws and regulations of the United States 
Government''.
    In subsection (b), the words ``the head of an agency'' are omitted 
as surplus.
    In subsection (c), the word ``advanced'' is omitted as surplus.
    In subsection (d), the words ``Notwithstanding the provisions of any 
other law governing the collection of claims owed the United States'' 
and ``unpaid or underpaid'' are omitted as surplus.

                       References in Text

    The Federal Property and Administrative Services Act of 1949, 
referred to in subsec. (b)(1)(A), is act June 30, 1949, ch. 288, 63 
Stat. 377, as amended. Title III of the Act is classified generally to 
subchapter IV (Sec. 251 et seq.) of chapter 4 of Title 41, Public 
Contracts. For complete classification of this Act to the Code, see 
Short Title note set out under section 471 of Title 40, Public 
Buildings, Property, and Works, and Tables.
    Section 3(p) of the Small Business Act, referred to in subsec. 
(b)(1)(B), (3)(C), is classified to section 632(p) of Title 15, Commerce 
and Trade.
    The Fair Debt Collection Practices Act, referred to in subsec. 
(b)(6), is title VIII of Pub. L. 90-321, as added by Pub. L. 95-109 
Sept. 20, 1977, 91 Stat. 874, as amended, which is classified generally 
to subchapter V (Sec. 1692 et seq.) of chapter 41 of Title 15, Commerce 
and Trade. For complete classification of this Act to the Code, see 
Short Title note set out under section 1601 of Title 15 and Tables.


                               Amendments

    1997--Subsec. (b)(1)(B). Pub. L. 105-135, Sec. 604(e)(1)(A), 
inserted ``and law firms that are qualified HUBZone small business 
concerns (as defined in section 3(p) of the Small Business Act)'' after 
``disadvantaged individuals''.
    Subsec. (b)(3). Pub. L. 105-135, Sec. 604(e)(1)(B)(i), inserted 
``and law firms that are qualified HUBZone small business concerns'' 
after ``economically disadvantaged individuals'' in introductory 
provisions.
    Subsec. (b)(3)(C). Pub. L. 105-135, Sec. 604(e)(1)(B)(ii)-(iv), 
added subpar. (C).
    1996--Subsec. (a). Pub. L. 104-134, Sec. 31001(l)(1), in 
introductory provisions substituted ``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.'' for 
``Under conditions the head of an executive or legislative agency 
considers appropriate, the head of the agency may make a contract with a 
person for collection services to recover indebtedness owed the United 
States Government.''
    Subsec. (b)(1)(A). Pub. L. 104-134, Sec. 31001(cc)(1), struck out 
``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.'' before 
``Nothing in this subparagraph shall''.
    Subsec. (b)(2). Pub. L. 104-134, Sec. 31001(c)(1), which directed 
the amendment of this section by substituting ``the head of an 
executive, judicial, or legislative agency'' for ``the head of an 
executive or legislative agency'' wherever appearing, was executed by 
substituting ``The head of an executive, judicial, or legislative 
agency'' for ``The head of an executive or legislative agency'', to 
reflect the probable intent of Congress.
    Subsec. (d). Pub. L. 104-134, Sec. 31001(l)(2), inserted ``, or to 
locate or recover assets of,'' after ``owed''.
    1994--Subsec. (b)(3)(A). Pub. L. 103-272 substituted ``15 U.S.C. 
637(d)(3)(C)(i)'' for ``15 U.S.C. 6376(d)(3)(C)(i)''.
    1992--Subsec. (g). Pub. L. 102-589 added subsec. (g).
    1986--Subsecs. (b), (c). Pub. L. 99-578, Sec. 1(1), (4), temporarily 
added subsecs. (b) and (c) and redesignated former subsecs. (b) and (c) 
as (d) and (e), respectively. See Effective and Termination Dates of 
1986 Amendment note below.
    Subsec. (d). Pub. L. 99-578, Sec. 1(1), (2), temporarily 
redesignated former subsec. (b) as (d) and inserted ``or (b)'' after 
``subsection (a)''. Former subsec. (d) redesignated (f). See Effective 
and Termination Dates of 1986 Amendment note below.
    Pub. L. 99-514 substituted ``Internal Revenue Code of 1986'' for 
``Internal Revenue Code of 1954''.
    Subsec. (e). Pub. L. 99-578, Sec. 1(1), (3), temporarily 
redesignated former subsec. (c) as (e), inserted ``or (b)'' after 
``(a)'', and substituted ``subsection (d)'' for ``subsection (b)''. See 
Effective and Termination Dates of 1986 Amendment note below.
    Subsec. (f). Pub. L. 99-578, Sec. 1(1), temporarily redesignated 
former subsec. (d) as (f). See Effective and Termination Dates of 1986 
Amendment note below.
    1983--Subsec. (c). Pub. L. 98-167 inserted ``This limitation does 
not apply in the case of a contract that authorizes a person to collect 
a fee as provided in subsection (b) of this section.''


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-135 effective Oct. 1, 1997, see section 3 
of Pub. L. 105-135, set out as a note under section 631 of Title 15, 
Commerce and Trade.


                    Effective Date of 1992 Amendment

    Section 7 of Pub. L. 102-589 provided that: ``The provisions of this 
Act [amending this section and section 3720A of this title, enacting 
provisions set out as notes under this section and section 6501 of this 
title, and amending provisions set out as notes under this section and 
sections 3335 and 6503 of this title] and amendments made by this Act 
shall take effect on the date of enactment of this Act [Nov. 10, 1992], 
except if such date of enactment is on or after October 1, 1992, such 
provisions and amendments shall be effective as if enacted on September 
30, 1992.''


            Effective and Termination Dates of 1986 Amendment

    Section 5 of Pub. L. 99-578, as amended by Pub. L. 102-589, 
Sec. 4(c), Nov. 10, 1992, 106 Stat. 5134, which provided that Pub. L. 
99-578 and the amendments made by section 1 of Pub. L. 99-578 (amending 
this section and enacting provisions set out as notes under this 
section) were to be in effect until Sept. 30, 1996, was repealed by Pub. 
L. 104-134, title III, Sec. 31001(cc)(2), Apr. 26, 1996, 110 Stat. 1321-
380.


                               Regulations

    Section 4 of Pub. L. 99-578 provided that: ``The Attorney General 
shall issue regulations to carry out this Act and the amendments made by 
section 1 of this Act [amending this section and enacting provisions set 
out as notes under this section]. The Attorney General shall submit the 
regulations to the Congress at least 60 days before they become 
effective.''


               Extension of Contracts With Private Counsel

    Section 4(d) of Pub. L. 102-589 provided that: ``The Attorney 
General may extend or modify any or all of the contracts entered into 
with private counsel prior to October 1, 1992, for such time as is 
necessary to conduct a full and open competition in accordance with 
section 3718(b) of title 31, United States Code.''


                       Audit by Inspector General

    Section 5 of Pub. L. 102-589 provided that:
    ``(a) Contents of Audit.--The Inspector General of the Department of 
Justice shall conduct an audit, for the period beginning on October 1, 
1991, and ending on September 30, 1994, of the actions of the Attorney 
General under subsection (b) of section 3718 of title 31, United States 
Code, under the pilot program referred to in section 3 of the Act 
entitled `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.', approved 
October 29, 1986 (37 U.S.C. 3718 note; Public Law 99-578 [set out 
below]). The Inspector 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 subsection, the 
results of the debt collection efforts of private counsel retained under 
such contracts, and the cost-effectiveness of the pilot project compared 
with the use of United States Attorneys' Offices for debt collection.
    ``(b) Report to Congress.--After completing the audit under 
subsection (a), the Inspector General shall transmit to the Congress, 
not later than June 30, 1995, a report on the findings, conclusions, and 
recommendations resulting from the audit.''


                        Pilot Program; Extension

    Section 3 of Pub. L. 99-578, as amended by Pub. L. 102-589, 
Sec. 4(b), Nov. 10, 1992, 106 Stat. 5134, which directed Attorney 
General to carry out subsections (b) and (c) of this section through a 
pilot program in each of at least 5 and not more than 15 judicial 
districts selected by the Attorney General, was repealed by Pub. L. 104-
134, title III, Sec. 31001(cc)(2), Apr. 26, 1996, 110 Stat. 1321-380.
    Pub. L. 104-134, title I, Sec. 101[(a)] [title I, Sec. 120], Apr. 
26, 1996, 110 Stat. 1321, 1321-22; renumbered title I, Pub. L. 104-140, 
Sec. 1(a), May 2, 1996, 110 Stat. 1327, provided that the pilot debt 
collection project authorized by Public Law 99-578 (formerly set out 
above) was extended through September 30, 1997.
    Prior extensions of the pilot program for legal services were 
contained in the following acts:
    Pub. L. 102-589, Sec. 4(a), Nov. 10, 1992, 106 Stat. 5134.
    Pub. L. 102-395, title I, Oct. 6, 1992, 106 Stat. 1832.
    Pub. L. 101-302, title II, May 25, 1990, 104 Stat. 216.


                       Report by Attorney General

    Section 2 of Pub. L. 99-578 directed Attorney General, not later 
than 180 days after Oct. 28, 1986, to transmit to Congress a report on 
actions taken under subsec. (b) of this section, as added by Pub. L. 99-
578.


                      Audit by Comptroller General

    Section 6 of Pub. L. 99-578 provided that:
    ``(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 
[set out above], conduct an audit of the actions of the Attorney General 
under subsection (b) 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 [set out above]. 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 
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 Congress a 
report on the findings and conclusions resulting from the audit.''

                  Section Referred to in Other Sections

    This section is referred to in sections 3302, 3701 of this title; 
title 5 section 5514; title 10 section 2780; title 22 sections 2671, 
2716; title 25 section 1616a; title 26 sections 6103, 6311; title 28 
section 3002; title 38 section 1729; title 42 sections 254o, 404, 1008, 
1383.
