1 - Statement of Work.docx

PRIVATE COUNSEL DEBT COLLECTION – IDIQ

STATEMENT OF WORK

1. Background

Collecting debts arising from civil cases is an important and enormous responsibility for the Department of Justice (Department). The Department’s 94 U.S. Attorneys’ Offices (USAOs) located throughout the country are primarily responsible for the enforcement and collection of debts owed to the United States. There are 94 federal judicial districts, including at least one district in each state, the District of Columbia and Puerto Rico. Three territories of the United States--the Virgin Islands, Guam, and the Northern Mariana Islands--have district courts that hear federal cases, including bankruptcy cases. The USAOs have largely assigned this task to their Financial Litigation Units (FLUs). The Executive Office for U.S. Attorneys assists the USAOs with their debt collection mission by providing management oversight and administrative support, by adopting policies and procedures to direct the FLUs’ work, and by acting as a liaison between the headquarters of the Department and the USAOs.

This requirement will support collection and litigation of civil debts by private counsel for USAOs that do not currently have private counsel firms under contract. This contract will fulfill task orders on an as needed basis in the United States Federal Judicial Districts to support U.S. Attorney’s litigation and collection of secured and/or unsecured civil federal debts. Private counsel contract awards were, and are being made to support United States Judicial Districts where federal agency cases referrals were, and are voluminous and consistent. This contract will fulfill task orders in specific United States Federal Judicial Districts on an as needed basis where the federal civil cases are not as voluminous to require private counsel in a United States Federal Judicial District for a continuous five-year period.

The policy of the Federal Government is to make every effort to collect delinquent debts owed to the United States. In furtherance of this policy, Congress, in 1986, enacted the Federal Debt Recovery Act (FDRA), P.L. 99-578, 31 U.S.C. sec. 3718(b). The FDRA originally authorized a pilot project for three years, in which the Attorney General was to contract with private counsel to assist the U.S. Attorneys in collecting debts owed to the United States, in not less than five nor more than ten Federal Judicial Districts. The FDRA has been amended three times: First in 1990 by P.L. 101-302, which extended the pilot through September 30, 1992; again in 1992 by P.L. 102- 589, which extended the pilot through September 30, 1996, and authorized its expansion to "not more than 15" Federal Judicial Districts; and most recently, on April 26, 1996, by Sections 31001(cc) (1) and (2) of Public Law 104-134. This latest amendment eliminates any requirement that the Attorney General try to award four (4) contracts to private counsel in each district, and repeals Sections 3 and 5 of the FDRA, so that the Attorney General now has permanent authority to contract with as few or as many private counsel in as many judicial districts as deemed appropriate.

The use of private counsel to collect delinquent debts was a significant departure from the Federal Government's previous debt collection policy. The U.S. Attorneys have historically been responsible for the collection of most delinquent debts referred by client agencies to the Department of Justice (DOJ or Department) for litigation and collection. For the most part, these debts were the result of direct, guaranteed, or insured loans made, or benefits conferred, pursuant to a variety of Federal programs administered by any of several client agencies including, but not limited to, the Departments of Agriculture, Education, Housing and Urban Development, Health and Human Services, Veterans Affairs, and the Small Business Administration. These agencies may not refer claims to DOJ for litigation until they have exhausted, without success, a series of administrative remedies to try to collect them. The procedures Federal agencies must follow in trying to collect, compromise, or settle their debts administratively, before they can refer them to DOJ for litigation, are set out in the Federal Claims Collection Standards 31 C.F.R., Parts 900 – 904. The Federal agencies, as well as private collection agencies on behalf of those agencies, will have attempted to collect on most, if not all, of the unsecured debts that are forwarded to DOJ for litigation and referred to private counsel. Many of these cases result in default or consent judgments against the debtors.

2. Scope

The private counsel (Contractor) shall furnish all legal services, including representation in negotiation, compromise, settlement, and litigation, to collect delinquent debts owed to the United States. Such services include the collection and litigation of secured and unsecured Federal debts and participation in bankruptcy, foreclosure, and other ancillary proceedings as may be required. The Contractor may undertake collection of delinquent non-tax civil debts referred to the DOJ for collection from Federal agencies, or that may originate from litigation at the Department or other DOJ components. All of the work to be performed under this contract must be performed within the counties that comprise the United States Federal Judicial Districts specified in Exhibit B – List of Federal Judicial Districts, and all litigation to collect secured and unsecured debts must be brought in the United States District Court in the same judicial district in which the debtor is located, unless the case is a foreclosure and the United States Attorney’s Office determines in consultation with the Contractor that it is more efficient for foreclosure matters to be filed in state or local courts.

3. Applicable Statutes, Regulations, Standards and Rules

a. All collection, litigation, and enforcement efforts on the part of the Contractor shall comply and be consistent with all Federal, state, and local statutes, regulations, applicable state and local Bar rules, procedures, and opinions, and the highest ethical and professional standards which apply to the collection of debts and credit reporting. These include but are not limited to the following:

Federal Debt Collection Procedures Act of 1990 (28 U.S.C. §§ 3001-3307); Federal Claims Collection Standards 31 C.F.R. Parts 900-904;

Privacy Act of 1974, as amended (5 U.S.C. § 552a);

Fair Debt Collection Practices Act (15 U.S.C. §§ 1692a-1692o);

Debt Collection Act of 1982, as amended (31 U.S.C. §§ 3701-3720E); Fair Credit Reporting Act (15 U.S.C. §§ 1681a-1681u);

Federal Debt Recovery Act (31 U.S.C. § 3718; as amended); Consumer Credit Protection Act (15 U.S.C. §§ 1671-1679) Model Rules of Professional Conduct;

Service Members Civil Relief Act (50 U.S.C. App. §§ 501—597b); Executive Order No. 12988, 61 FR 4729, 1996 WL 46665 (Pres.); Federal Rules of Civil Procedure;

Federal Rules of Bankruptcy Procedure;

Applicable case law in the Contractor’s jurisdiction; and, All applicable local rules and procedures promulgated by the United States District Courts and the individual Federal judges in the judicial districts.

b. These statutes and standards, as well as any other applicable Federal and state laws, rules and regulations pertaining to debt collection practices of particular agencies, or the Government as a whole, and any updated revisions to those statutes and standards, laws, rules and regulations, are incorporated by reference into this statement of work and will be considered part of the contract. Violation of any applicable laws, rules, regulations, or ethical standards will be sufficient cause for termination of the contract for default.

c. If the Contractor is the subject of a claim or sued by a debtor for any conduct performed under or related to this contract, including but not limited to, the violation of any statute, regulation, standard or rule, the Contractor shall be solely responsible for its own defense of such claim or lawsuit and the Government will not assist the Contractor financially or otherwise in the defense of such claim or lawsuit, and the Contractor shall be solely liable for any judgment, fees, and/or costs related to the claim or lawsuit.

4. Assistant United States Attorney (AUSA) Liaison

The Government will designate an AUSA in the judicial district(s) covered by this contract to be the primary point of contact for the Contractor in all litigation and assist the Contracting Officer’s Representative (COR) in monitoring and overseeing the legal work performed.

5. Automation Requirements

5.1 Minimum Hardware/Software Requirements

The United States District Court in the judicial district covered by this contract requires electronic case filing (ECF) for the litigation of debts; therefore, the Contractor shall be registered for ECF in that court. The Contractor is also required to use the Department’s automated debt collection system known as the Consolidated Debt Collection System (CDCS), providing all updates to case matters. To that end, the Contractor shall be responsible for providing certain equipment for ECF capability and to use the CDCS. Current minimum requirements for the ECF and the CDCS are below. The Government reserves the right to impose such other hardware and/or software requirements as are consistent with Department and/or Government policy. NOTE: Prior to updating any software, it is important that the Contractor coordinate with the COR to avoid potential conflicts between the CDCS and their computer system.

Hardware

· All wireless access to DOJ must be from a Wi-Fi Protected Access 2 (WPA2) or higher encrypted wireless network.

· Scanner—Black-and-white automatic document feeder, directly connected to the personal computer (PC) (not networked)

· Printer— with vendor supported drivers directly connected to PC (not networked)

· Memory—32 GB minimum of RAM

· Disk Space—951 GB minimum of HD

· LCD or LED monitor

· Personal Identity Verification (PIV) card reader (actual card will be granted to all adjudicated staff requiring access to DOJ Information systems)

Software

· Adobe PDF—Vendor supported version used to convert images and electronic documents to PDF format

· Web Browser—Vendor supported version of Chrome web browser (note newer browser versions may not have been tested for regression in support of the CDCS application)

· Operating System—Vendor supported version of Windows including current security patches and/or updates

· Word Processing—Vendor supported version of Microsoft Office Suite

· Anti-Virus/Spyware—Commercial off-the-shelf anti-virus/spyware software maintained at the latest patch level including virus definitions

· Citrix Receiver for Windows 4.9.9 LTSR Cumulative Update 9 or latest version

5.2 CDCS Access Requirements

a. The Government’s Security Programs Manager (SPM) will provide the Contractor secured access to the CDCS application using a Virtual Private Network. The network will require the installation of a software client on each PC used by the Contractor to access the CDCS as well as a watermark to identify the PC to the system. The Government will pay the costs for the software license for up to two Contractor employees (or more at the Government’s discretion). The Government will provide each Contractor employee using the CDCS a User ID and security token to be used for authentication during the application log-in process. The Contractor agrees to install on each PC accessing the CDCS a commercial off-the- shelf anti-virus software product maintained at the latest patch level and to run daily anti-virus scans of all programs and files stored on the PC. The Contractor also agrees to maintain its operating system at an up-to-date security patch level at all times.

b. All contractor personnel with CDCS access will be required to sign the CDCS Rules of Behavior before cases are assigned. Additionally, all employees accessing the CDCS application will be subject to the security requirements set forth in the contract and must take the annual DOJ Cybersecurity Security Awareness Training.

5.3 CDCS Use Restrictions

The Contractor shall not use the CDCS to view, monitor, manage, process, support, or track any cases or litigation that are not debts referred to it under this contract. The Government reserves the right to impose such other security requirements as are consistent with Department and/or Government policy.

5.4 CDCS Training for Contractor Employees

The Government will make CDCS training materials available to the Contractor virtually. As needed and as resources are available, the Government will pay the costs of training two (2) Contractor employees (or more at the Government’s discretion) to operate the CDCS. Employees selected by the Contractor for CDCS training may be trained in a facility within the judicial district or may be required to attend training classes at another facility designated by the Government. If the Contractor's employees are required to attend training at a facility outside of the judicial district, the Government will reimburse the Contractor employees for transportation to/from the training facility and the Contractor's place of business, lodging and per diem (e.g., meals and incidental expenses) for up to one (1) week at rates not to exceed those authorized and in effect for Government employee travel as set forth in the General Services Administration’s (GSA’s) Federal Travel Regulation. DCM will not provide cost reimbursement for PCs located within 50 miles (locally) of the selected training facility.

Other training materials may also be provided in lieu of traveling to a training facility for certain types of users. Training of any additional Contractor employees (to include replacements for separated or reassigned previously trained employees) may be arranged at the Contractor's expense. If the COR or the AUSA determines that a CDCS-trained employee requires additional training, the Contractor shall make said employee available for training.

5.5 Approved "Generic" Written Instruments and Inspection of Documents

At the start of the period of performance of the contract, the Contractor shall obtain the approval of the AUSA for usage of ‘generic’ letters (templates), forms, and pleadings necessary to collect the debts referred to it for litigation. The Contractor shall use the CDCS to produce all of the approved "generic" letters, forms, and pleadings necessary to collect the debts referred to it for litigation. Any approved "generic" letters, forms and pleadings produced by the Contractor outside of CDCS must be uploaded into CDCS. It is also the Contractor’s responsibility, to ensure that all documents sent under its signature on behalf of the U.S. Government to collect debts comply with all applicable statutes, regulations, standards, and rules, including those referenced in Section 3. If at any time the Contractor determines that a “generic” document produced by the CDCS does not comply with one or more applicable statutes, regulations, standards and/or rules, the Contractor shall promptly notify the AUSA and the COR in writing of any deficiency in the document. Additionally, if the Contractor desires to use a document in correspondence or in court, the text of which departs from the approved “generic” instruments, the Contractor shall request and obtain written approval of the different text from the AUSA and the COR before sending or filing it. If a “non-generic” document submitted for approval is one that the Contractor proposes to use frequently, the Contractor shall expressly request written approval for continuous use of the document without additional approval.

5.6 PIV Card

Anyone accessing DOJ case information will be required to obtain a personal identity verification (PIV) card. The Contractor shall also obtain a PIV card reader. PIV cards must be obtained through a USAccess Credentialing Center. Upon award of the contract, the COR will provide specific instructions on how to obtain a PIV card including the location of the USAccess Credentialing Center to be used by the Contractor.

6. Case Referrals

a. The DOJ’s Nationwide Central Intake Facility (NCIF) will electronically forward debts that are accepted for litigation to the Contractor in the CDCS. The Contractor may also receive physical agency files on such debts via U.S. mail or FedEx shipments. These referrals may include cases where the USAO has already obtained a judgment, but for which additional enforcement action is required. The Contractor may also receive referrals directly from the AUSA or transfer cases from another private counsel.

b. The FDRA presently precludes referral of cases arising under the Internal Revenue Code of 1986, as amended (26 U.S.C. 1 et seq.), to a Contractor. The Department does not refer criminal cases to the Contractor.

7. Contingency Fees

The Contractor shall not deduct their contingency fees from sums collected from debtors. Instead, the Contractor shall direct debtors to send payments directly to the designated lockbox bank or to pay.gov, an electronic payment method. The lockbox bank will notify the NCIF daily of all collections received and the NCIF will post the payments to the appropriate debtors' accounts. The Contractor shall receive specific instructions from the Government concerning the deposit of collections in the lockbox.

7.1 Computation and Payment of Contingency Fees

All payments made by debtors for which a contingency fee is due to the Contractor shall be deemed to have been received on the last day of the month. CDCS will automatically calculate the contingency fees due to the Contractor each month, applying the percentage established for CLIN 0001 to the payments received from the Contractor's debtors during the entire preceding month, except as set forth in Section 7.2. Contingency fees due to the Contractor shall be paid within thirty (30) calendar days after the billing cycle closes, in accordance with the Prompt Payment Act of 1982. The billing cycle starts on the first day of the month and ends on the last day of the month. If the Contractor finds a discrepancy between the amount of contingency fees billed and the amount paid by the Government, the Contractor shall bring such discrepancy to the attention of the COR no later than three (3) business days after the Contractor receives the payment of contingency fees.

7.2 Payments for Which No Contingency Fees Are Due or Owed to Contractor

a. Filing Fee. The Government will not pay the Contractor any contingency or other fees, or pay or reimburse any costs or expenses of any kind to the Contractor, on the amount of the Federal District Court filing fee set forth in 28 U.S.C. § 1914(a). However, the Contractor shall always seek, pursuant to 28 U.S.C. § 1920 and any other applicable statutes, to recover from Federal debtors any costs the Contractor incurs in suing them, including the filing fee. Since the Contractor shall be suing on behalf of the United States, the Contractor is not required to pay the filing fee called for in 28 U.S.C. § 1914(a), but the Contractor shall request the fee from the debtor when seeking costs pursuant to 28 U.S.C. § 1920 or any other applicable statute. See 28 U.S.C. § 2412(a)(2), which permits the United States to add, "... an amount equal to the filing fee prescribed under section 1914(a) of this title ...," to any, "... judgment for costs, when awarded in favor of the United States in an action brought by the United States...," even though the United States is not required to pay any such filing fee. If the court determines that the filing fee is not collectible from the debtor, the Contractor shall not be responsible for collecting it.

b. Payments Voluntarily Sent to Referring Agency. The Government will not pay the Contractor any contingency or any other fees, or pay or reimburse any costs or expenses of any kind to the Contractor, on any sums or amounts that the debtor voluntarily sends directly to the referring agency after the debt has been referred to the Contractor.

c. Debt Consolidation or Refinancing Programs. The Government will not pay the Contractor any contingency or other fees, or pay or reimburse any costs or expenses of any kind to the Contractor, on any sums or amounts collected from the debtor pursuant to debt consolidation or refinancing through Federal programs, such as the William D. Ford Loan Consolidation Program or any similar Federal rehabilitation or refinancing program.

d. Treasury Offset Program. The Contractor is required to refer any judgments obtained under this contract to the Treasury Offset Program (TOP), unless otherwise excluded pursuant to the DOJ Policy Statement, Offset of a Debtor’s Federal Payments and DOJ Instruction 1400.03.02, Private Counsel Offset of a Debtor's Federal Payment. The Government will not pay any contingency or other fees, or pay or reimburse any costs or expenses of any kind to the Contractor, on any sums or amounts the Government collects or recovers from debtors pursuant to or under the TOP.

8. Legal Services to Collect Federal Debts

All collection, litigation, and judgment enforcement services furnished by the Contractor shall be performed in accordance with the terms and conditions of this contract and under the guidance of the AUSA.

8.1 Initial Contact with Debtor

Before the NCIF forwards the unsecured debts it receives from federal agencies to the Contractor, it will automatically send each debtor a demand letter, a copy of which will be included in the electronic case file referred to the Contractor by the NCIF. If the debtor responds to this demand letter, the NCIF will tell the debtor to contact the Contractor to which the debt has been referred. In any case, within ten (10) calendar days of receipt of a referred case, the Contractor shall contact the debtor by letter or telephone to advise the debtor of the referral of the case for litigation. If the Contractor is unable to comply with this provision, the Contractor shall request relief in writing from the COR prior to the tenth business day after receipt of the referred cases at issue. Relief will only be granted for good cause. The Contractor's initial contact with the debtor, and all subsequent contacts, must be in compliance with all Federal, state, and local statutes, regulations, and meet the highest ethical and professional standards applicable to the collection of debts and credit reporting. These include, but are not limited to, those mentioned in Section 3. If the debtor no longer resides in the judicial district or cannot be located, the Contractor shall return the case in accordance with the provisions of Section 19 within five (5) business days.

If the debtor does not pay in full as a result of the initial contact, the Contractor shall begin enforced collection efforts within thirty (30) business days. The litigation file that accompanies each referral from the NCIF to the Contractor shall include a Claims Collection Litigation Report (CCLR) and a Certificate of Indebtedness, or the equivalent thereof. The Contractor shall obtain any other supporting documentation that may be required to file suit and secure a judgment against the debtor from the referring agency. Obtaining additional supporting documentation from the referring agency will satisfy the requirement of beginning enforced collection efforts.

8.2 Debtors Who Agree To Pay In Full

If a debtor acknowledges the debt and agrees to pay it in full within thirty (30) calendar days, the Contractor shall:

(a) Require the debtor to execute a consent judgment for the full amount of the debt;

(b) Explain to the debtor that the consent judgment will be entered with the court if full payment is not received within thirty (30) calendar days, as agreed;

(c) Notify the debtor that the NCIF will send him or her a coupon to mail, along with the debtor's payment, to DOJ’s designated lockbox, and an envelope in which to mail the coupon and the payment; and,

(d) Enter the required data on the agreement with the debtor into CDCS to notify the NCIF to send the payment coupon and envelope to the debtor. The NCIF will notify the Contractor when the debtor's payment has arrived. The Contractor may hold a case in prejudgment status for no longer than thirty (30) calendar days pending receipt of notification from the NCIF that the payment promised by the debtor arrived at the lockbox, as agreed. Whenever full payment is not received within thirty (30) calendar days, the NCIF will notify the Contractor and the Contractor shall enter the executed consent judgment with the court and initiate efforts to enforce the judgment within five (5) business days.

8.3 Debtors Who Seek to Compromise or Settle Debts

If a debtor acknowledges the debt but seeks to negotiate a compromise or settle it for less than the full amount due, the Contractor shall require the debtor to furnish such information as the Contractor may require regarding the debtor's financial condition, to enable the Contractor to evaluate the debtor's proposal. If, in the Contractor's professional opinion, on the basis of information received from the debtor, and/or from any other data available to the Contractor, it is in the Government's best interests to accept the debtor's offer, the Contractor shall contact the referring agency and the appropriate AUSA, advising them of the offer and its recommendation. Under no circumstances shall the Contractor compromise or settle a case for less than the full amount of the debt without advance consultation with the referring agency, unless the referring agency has clearly indicated, in writing, that some other procedure would be acceptable. If both the referring agency and the AUSA agree to accept the debtor's compromise offer, the Contractor shall do so. As a general rule, all compromise agreements must require the debtor to pay the compromised amount in a single, lump sum payment. If, however, in the Contractor's best professional judgment the debtor should be permitted to pay the compromised amount in several payments, the compromise agreement must provide for full payment of the compromised amount within ninety (90) calendar days and the Government's claim must be secured by entry of a consent judgment in the full amount of the debt owed.

8.3.1 Concurrences on Compromises or Settlements

The Contractor shall consult with the AUSA and the referring agency about the terms of any compromise or settlement the Contractor proposes to enter into with a debtor. The AUSA and the referring agency reserve the right to direct the terms and conditions of settlement or compromise for any debt referred to the Contractor. This may include the waiver or compromise of any amount to be paid. The AUSA may agree with the Contractor that the debtor's offer should be accepted or with the referring agency that the debtor's offer is insufficient. In any event, the Contractor shall be bound by the decision of the AUSA. The Contractor shall not be entitled to any contingency fee on any sums not collected because of a compromise or settlement. The Contractor is entitled to receive its contingency fees based solely on the sums it actually recovers from debtors.

8.3.2 Compromise

Within five (5) business days of the consummation of a compromise, the Contractor shall send the referring agency a letter and include a copy of the compromise agreement. Once final payment is made, the Contractor shall notify the referring agency so that the case can be closed.

8.4 Debtors Who Seek To Repay Their Debts in Installments

If a debtor acknowledges the debt and seeks to repay the debt in installments, the Contractor shall require the debtor to submit sufficient financial information to enable the Contractor to evaluate the debtor's financial condition. An installment payment plan shall be established only when the debtor is unable to make payment in full, or to obtain suitable financing from a private institution in order to make payment in full. Establishment of an installment payment plan shall not be considered unless and until a financial statement has been fully completed and signed by the debtor. Under no circumstances shall an installment payment plan be agreed to, or the terms and conditions of any plan be discussed, with the debtor prior to receiving a financial statement. If, in the Contractor’s professional opinion, based upon its review of the debtor's financial status, an installment repayment plan is justified, the Contractor may propose an installment repayment plan to the debtor that complies with the following provisions.

8.4.1 Terms of Installment Payment Plans

Every installment payment plan must be in writing and must, if completed according to its terms, result in repayment of the entire debt, within the shortest time practicable, based upon the debtor's financial resources. All installment repayment plans must require that the debtor pay the entire amount of the debt due, including all principal, interest, administrative costs and penalties, attorneys' fees and court costs. The Contractor shall be liable to the Government for any amounts due the United States that it waives in violation of the terms of this policy, and the Government may deduct the amount of any such liability from any contingency fees payable to the Contractor. All installment payment plans must also specifically require debtors to provide the Contractor with new and current financial information at least once a year, to enable the Contractor to determine if there might be grounds for increasing the amount of the installment payments the debtor should be required to pay.

8.4.2 Consent Judgments for Debtors Paying Under an Installment Agreement

The Contractor shall require all debtors seeking to repay their debts under an installment agreement to execute a consent judgment for the full amount of the debt. Under appropriate circumstances, and for a reasonable period of time not exceeding one hundred and eighty (180) calendar days, the Contractor may, for negotiating purposes, agree with the debtor not to file this consent judgment as a lien against any of the debtor's property in the local court where the debtor resides or where such property may be located. It must, however, be entered with the U.S. District Court where the Contractor is suing the debtor so that it can be enforced if the debtor defaults on the installment payment plan to which the debtor has agreed. The Contractor shall not use confess-judgment notes, sometimes referred to as "cognovit notes," or promissory notes containing an agreement for judgment. The consent judgment must be for the full amount of the debt, including principal, all prejudgment interest, administrative costs, and penalties payable to the date of the judgment, court costs, and attorney's fees if authorized. Within five (5) business days after execution of a consent judgment, the Contractor shall notify the referring agency of the consent judgment and the terms of any installment repayment plan it has agreed to with the debtor.

8.4.3 Debtors Paying on Installment Plans Who Move Out of the District

If a debtor with whom the Contractor has entered into an installment payment plan moves out of the judicial district covered by this contract, the Contractor shall be entitled to its contingency fee on any payments received from that debtor as long as the debtor continues to make such payments in compliance with the terms of the installment payment plan, except in the event that this contract is terminated by the Government. If a debtor on an installment payment plan moves out of the Contractor's district and stops making timely payments as called for by the payment plan, the Government may require the Contractor to return the case or transfer it to another private counsel contractor or to the USAO in the district to which the debtor has moved. In such a case, the original Contractor will no longer be entitled to any contingency fees on payments made thereafter by such a debtor.

9. Initiation of Legal Action

If the debtor does not pay the entire outstanding balance or does not agree to an approved installment payment plan within thirty (30) calendar days of the Contractor's initial contact and there is no judgment against the debtor for the entire outstanding balance, the Contractor shall sue the debtor within thirty (30) business days. The Contractor shall bring suit against the debtor in time to ensure that any applicable statutes of limitations do not expire. Under no circumstances is the Contractor permitted to initiate legal action on behalf of the United States if the applicable statute of limitations has expired, except to enforce any in rem rights of the United States that have not yet been extinguished, notwithstanding the running of any statutes of limitations on the underlying claim, secured in whole or in part, by the in rem rights in favor of the United States. The Contractor shall be responsible for exercising sound professional judgment in initiating legal action. In the event that the Contractor discovers an impediment to initiating or continuing legal action, the Contractor shall notify the AUSA within three (3) business days.

9.1 Jurisdiction for Unsecured Federal Debt

In cases to collect unsecured debts, the Contractor shall sue the debtors in the United States District Court specified in Section 2. Suits will be filed in the name of the ”United States of America", as plaintiff; as such, the Contractor shall not have to pay any District Court filing or docket fees. In cases where the U.S. Attorney has already obtained a judgment against the debtor or where litigation is underway, the U.S. Attorney will move to withdraw as counsel and substitute the Contractor unless the AUSA decides otherwise.

10. Debtor Payments

The Contractor shall instruct debtors to send payments directly to a bank lockbox to be specified by the Department of Justice; to make all checks, drafts, or money orders payable to the "U.S. Department of Justice"; and to include the NCIF claim number on each payment instrument. Under no circumstance is the Contractor permitted to deposit debt payments into its own account. Debtor payments can also be processed at Pay.gov a secure Government website that allows debtors to submit payments for debt(s) electronically. Pay.gov is managed by the Department of Treasury. Notwithstanding these instructions, some debtors may send payments to the Contractor. The Contractor shall convert all cash or currency it may receive from debtors to a check or other negotiable instrument made payable to the "U.S. Department of Justice," no later than the next business day after the Contractor receives such cash or currency. The Contractor shall include the debtor's NCIF claim number on each such instrument and mail such payments to the bank lockbox no later than the next business day after receipt of the debtor’s payment. Any check, draft or money order made payable to the Contractor and received by the Contractor in satisfaction, or partial satisfaction, of a debt owed to the United States must be endorsed by the Contractor and remitted in accordance with the provisions of this paragraph. Any conditionally restricted payment instrument received by the Contractor which does not pay the account in full or has other restrictions unacceptable to the Government must be endorsed to countermand the restriction or returned to the debtor in return for a new unconditional, unrestricted check or draft. The Contractor shall remit the entire amount of all payments received to the specified bank's lockbox, without deducting any contingency fee, attorney's fee, or any other amount to which the Contractor may be entitled. The Contractor shall be liable for any interest lost by the Contractor's failure to forward all payments to the lockbox on the next business day after the Contractor receives them.

10.1 Electronic Funds Transfers (EFTs)

All payments on debts of $50,000.00 or more should be made by Electronic Funds Transfers (EFT). The Contractor shall contact the AUSA for exceptions to this policy and/or for instructions on the EFT procedures whenever they expect debtors to be making payments of such amounts.

10.2 Application of Payments

The Department of Justice follows the "U.S. Rule" in applying civil payments. Under this rule a partial payment is credited first to costs and fees, second to accrued interest, and the balance, if any, to principal. Subsequent interest then accrues on the remaining principal, computed from the date of the partial payment. Furthermore, interest on civil money judgments awarded in the U.S. District Courts on or after October 1, 1982 must be compounded annually. See 28 U.S.C. § 1961(b). Therefore, once a year, on the anniversary date of the entry of the judgment, any outstanding interest balance must be added to the outstanding principal balance, thus creating a new principal balance. This new principal balance then becomes the starting point for computing interest on the judgment during the following year. The CDCS will make all of these calculations for the Contractor automatically.

10.3 Delinquent Payments

Contractor employees with authorized access will be allowed on-line "read-only" access to the financial information in the CDCS that pertains to all of the debtors whose debts have been referred to the Contractor for collection. The Contractor shall contact any debtor who has entered into a repayment plan and whose payment is more than fifteen (15) calendar days overdue and shall demand immediate remittance of the delinquent amount.

10.4 Treasury Offset Program

The Treasury Offset Program (TOP) is a centralized offset program, administered by the Department of the Treasury (Treasury), Bureau of Fiscal Service, to collect delinquent nontax debts owed to federal agencies and states, in accordance with current federal laws.

TOP offsets include, but are not limited to, the following federal payments: income tax refunds, salary, travel advances and reimbursements, retirement payments, vendor payments and some Social Security benefit payments. The Contractor is required to refer any judgments obtained under this contract to the TOP, unless otherwise excluded pursuant to the DOJ Policy Statement, Private Counsel Offset of a Debtor's Federal Payment, DOJ Instruction 1400.03 incorporated herein. If the Contractor fails to refer a judgement to the TOP consistent with the DOJ Policy Statement and Instruction 1400.03, the Department may refer the judgment to the TOP directly and require the Contractor to reimburse the Government for any costs or lost recovery incurred by the Government.

10.4.1 TOP Notice to the Debtor

Prior to referring a civil debt to TOP, the debtor will be provided with a Notice of Intent (NOI) to offset. The NOI will provide the reason and amount of the claim, the intention of DOJ to collect the claim through administrative offset, and a statement explaining the rights of the debtor.

Required information and steps for processing the NOI are included in the DOJ Instruction 1400.03, Private Counsel Offset of a Debtor's Federal Payment. The Department refers a civil debt to TOP 60 days after the date the NOI was sent to the debtor. Required information and steps for referring debts to TOP are included in DOJ Instruction 1400.03, Private Counsel Offset of a Debtor's Federal Payment.

10.4.2 Debts that are Not Referable to TOP

The Department does not refer the following civil debts to TOP: (1) Debts that are paid in full; (2) Debts with a balance of less than $25; (3) Debts that are in foreclosure; and (4) Debts that have a bankruptcy cause of action where the override flag has not been selected.

10.4.3 TOP Debts and Payment Plans

The Contractor has the option to add or remove a debtor on a payment plan to and from TOP. Establishing or changing payment plans must be handled in accordance with the applicable requirements, terms and conditions of the contract (see Section 8.4, Debtors Who Seek to Repay Their Debts in Installments, and Section 10, Debtor Payments).

10.4.4 Removal of a Debtor from TOP

The process to remove a debtor from TOP may take up to four (4) weeks from the date of the request. A debt may be removed from TOP because (1) the debt has been paid in full, (2) the debtor files bankruptcy, (3) the case is closed, (4) in limited situations acceptable payment arrangements have been agreed, and (5) the debtor is deceased. See DOJ Instruction 1400.03.02 Private Counsel Offset of a Debtor's Federal Payment for details.

10.4.5 TOP Refunds and Disbursements

The Department will return the amount collected on a debt to a debtor or payee when there is an approved request, when the debtor or payee no longer owes the United States, or as otherwise required by law. Refer to DOJ Instruction 1400.03.01, Treasury Offset Program Refunds and Disbursements for details.

10.4.6 Taxpayer Address Request

The Taxpayer Address Request (TAR) process allows users to verify the last address used by a Debtor, whether it is from a tax filing, an audit, or any additional action(s) the Internal Revenue Service (IRS) has taken. Private Counsel users request an address from the IRS via the Department’s Consolidated Debt Collection System.

10.4.7 No Contingency or Other Fees, or Cost or Expenses, Due or Owed

The Government will not pay any contingency or other fees or reimburse any costs or expenses of any kind, to the Contractor on any sums or amounts the Government collects or recovers from debtors pursuant to or under the TOP.

11. Legal Services to Collect Secured Debts -- Foreclosures

In addition, or in the alternative to referring unsecured debts to the Contractor for litigation, the Department may refer debts secured by real and/or personal property to the Contractor for foreclosure proceedings. Historically, the majority of foreclosure cases referred to contractors are in the following categories: (1) foreclosures on single family houses and farms in rural areas under programs administered by the U.S. Department of Agriculture; (2) foreclosures on various collateral securing loans from the Small Business Administration or other Federal agencies; (3) foreclosures on properties secured by Home Equity Conversion Mortgages (HECM) from the Department of Housing and Urban Development (HUD) and (4) foreclosures on single family houses secured by loans from HUD or the Department of Veterans Affairs. The collateral in these foreclosure cases may include both real estate and personal property. Foreclosures under farm programs are likely to be more complex than foreclosures under single family housing programs due to various factors, including that farm foreclosures often last several years and may involve several notes, many of which have been re-scheduled several times, and may also involve other lien holders, and personal property in addition to real estate. Similarly, foreclosures on HUD HECM cases may require extensive litigation involving multiple heirs and other lien holders. The Contractor shall file and handle foreclosure proceedings against the collateral for such secured debts.

11.1 Basic Foreclosure Tasks

The basic requirements involved in litigating foreclosure cases are to affect the sale of the property at a court-ordered auction and to secure payment to the Government of the amount to which it is entitled by law, or to secure for the Government, good and marketable title to the property that is the subject of the litigation.

11.2 Multiple Agency Interests

If the foreclosure action or title search or any other information available to the Contractor reveals an interest in the debtor's property by any Federal agency other than the agency that referred the debt to the Department, or an interest of the referring agency other than the interest being foreclosed upon, such as a junior lien, the Contractor shall notify the AUSA and the referring agency within one (1) business day of learning of that interest and seek advice on how to proceed.

11.3 Other Direct Costs for Secured Debts

The Government will reimburse the Contractor for certain foreclosure related expenses provided the Contractor properly invoices the Government for these expenses and includes sufficient supporting documentation of the expense incurred, the description of the expense, and the date of service for the expense is within the contract period of performance. See Contract Line Item Number Description, CLIN 0002AD.

11.3.1 Invoicing for Secured Debts

The Contractor shall invoice DOJ monthly via the CDCS system for all costs, expense-reimbursements, and fees associated with litigation and collection of secured debt. The Contractor shall take the necessary steps to ensure the accuracy of information presented in invoices, to include non-duplication of previously invoiced items, verification that fees are not greater than the contracted rate, and the dates of expenses, costs, and fees are not outside of the period of performance of the contract.

11.3.2 Handling Payments for Secured Debts

The Contractor shall direct all payments for secured debts be made directly to the Department of Justice; make all checks, drafts, or money orders payable to the "U.S. Department of Justice"; and to include the NCIF claim number (aka CDCS#) on each payment instrument. The Contractor shall not deposit payments into its own account nor direct payments directly to the referring agency. In the event, that a payment is made to the Contractor, the Contractor shall convert all cash or currency it may receive to a check or other negotiable instrument made payable to the "U.S. Department of Justice," no later than the next business day after the Contractor receives such cash or currency. The Contractor shall include the debtor's NCIF claim number or CDCS# on each such instrument and mail such payments to the bank lockbox no later than the next business day after receipt of the debtor’s payment. The Contractor shall provide a full accounting to the COR or AUSA of any secured debt financial transactions occurring outside of DOJ’s purview but with the Contractor’s knowledge.

11.4 Recall or Referral of Partially Completed Foreclosure Cases

11.4.1 Prorated Fee for Partially Completed/Recalled Foreclosure Cases

The statutes and regulations governing many Federal programs provide certain provisions for the borrowers to be able to avoid foreclosure of their property under a variety of circumstances, including if the debtor pays the mortgage in full. When these provisions are triggered in a particular foreclosure case, even after the case has been referred to a Contractor, the Department or the referring agency may be obligated to recall it before the Contractor has completed the foreclosure, but after the Contractor has expended some effort on the case.

When, through no fault of the Contractor, the Department or the referring agency recalls a foreclosure case from the Contractor before the foreclosure is complete, the flat fees to be paid to the Contractor as set forth in this contract will be prorated as follows:

11.4.2 Prorated Fee for Partially Completed/Referred Foreclosures

Periodically, the Department may refer foreclosure cases which have been worked on to various degrees prior to referral, either by the Department or by a previous contractor. In any such event, the Government will notify the Contractor of the status of the case and the Contractor shall be required to complete the foreclosure. The Department will prorate the applicable fees as follows:

11.4.3 Foreclosure Milestones

The Contractor is entitled to be paid for their legal services pro rata for the work performed in regard to the contracted flat fee for foreclosure. The Contractor may submit an invoice for their prorated legal fees incurred on foreclosure files in accordance with the milestone reached as stated in the schedule set forth below. With each subsequent pro rata billing, prior pro rata payments on the debt must be considered.

11.5 Deed In Lieu of Foreclosure

After receiving notice that the Government intends to foreclose on a debtor's property, the debtor may offer the Contractor a Deed in Lieu of Foreclosure. If the debtor makes such an offer, the Contractor shall advise the referring agency as to the sufficiency of such a deed under the circumstances and ask the referring agency if it will accept such a deed. If the referring agency agrees to accept such a deed, the Contractor shall provide the services required under CLIN 0002AB at the price set forth in the contract. If acceptance of a Deed in Lieu of Foreclosure terminates the foreclosure proceedings, the Contractor may also be entitled to a prorated fee for its work in the foreclosure litigation in accordance with the schedule set forth above in Section 11.4.

11.6 Evictions or Other Possessory Actions

If requested to do so in writing by the AUSA or the COR, the Contractor shall file and pursue eviction or possessory actions and notify the referring…