DJJB-11-RFP-0726.doc

DJJB-11-RFP-0726

Private Counsel Debt Collection

Page i of 69

PA Eastern District

TABLE OF CONTENTS

3SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 Introduction B.2 Contract Type and Services B.3 Contract Pricing Table B.4 Unauthorized Expenses

SECTION C - STATEMENT OF WORK

C.1 Background C.2 Scope C.3 Applicable Statutes, Regulations, Standards and Rules C.4 AUSA Liaison C.5 Automation Requirements C.6 Case Referrals C.7 Contingency Fees C.8 No Separate Suit Fees C.9 Legal Services to Collect Unsecured Federal Debts C.10 Initiation of Legal Action C.11 Debtor Payments C.12 Legal Services to Collect Secured Federal Debts -- Foreclosures C.13 Bankruptcy Proceedings C.14 Responses to Affirmative Defenses C.15 Judgments C.16 Bills of Costs C.17 Appeals by Defendants C.18 Debtor's Disability or Death C.19 Performance Standards C.20 Contractor Personnel C.21 Records of Contractor Activities and Periodic Reports C.22 Document Production C.23 Restrictions on Use C.24 Inspection of Documents C.25 Returning Cases to the Department C.26 Contract Expiration C.27 Close-out Procedures

SECTION D - PRESERVATION, PACKING AND MARKING

D.1 Preservation, Packing and Marking

SECTION E - INSPECTION AND ACCEPTANCE

E.1 Inspection and Acceptance E.2 Clauses Incorporated by Reference

SECTION F - DELIVERIES OR PERFORMANCE

F.1 Contract Term F.2 Place of Performance F.3 Consideration of Performance in Case Assignments F.4 Notice to the Government of Delays F.5 Breach of Contract F.6 Clauses Incorporated by Reference

SECTION G - CONTRACT ADMINISTRATION DATA

G.1 Administrative Contracting Officer (ACO) G.2 Contracting Officer's Technical Representative (COTR) G.3 Contractor Representative G.4 Security Programs Manager (SPM) G.5 Invoice Requirements and Payment Provisions G.6 Limitation of Funds

SECTION H - SPECIAL CONTRACT REQUIREMENTS

H.1 Key Personnel H.2 Government-Furnished Property H.3 Permits and Licenses H.4 Subcontracting Restriction H.5 Professional Liability Insurance H.6 Hold Harmless and Indemnification Agreement H.7 Security of Systems and Data Including Personally Identifiable Data H.8 Conflict of Interest H.9 Confidentiality of Data H.10 Security Requirements - Unclassified

SECTION I - CONTRACT CLAUSES

I.1 Clauses Incorporated by Reference I.2 Clauses Incorporated in Full Text

SECTION J - ATTACHMENTS

J.1 List of Acronyms J.2 CLIN Descriptions J.3 Sample Non-Disclosure Agreement J.4 Sample Rules of Behavior

SECTION K - REPRESENTATIONS, CERTIFICATIONS & OTHER STATEMENTS OF OFFERORS

K.1 FAR 52.204-8 Annual Representations and Certifications (FEB 2009)

SECTION L - INSTRUCTIONS, CONDITIONS AND NOTICES TO OFFERORS

L.1 Type of Contract L.2 Inquiries Concerning the RFP L.3 Mandatory Eligibility Requirements L.4 Instructions for Proposal Submission L.5 Instructions for Calculation of Proposed Fixed Prices L.6 Protests Filed Directly with the Department of Justice L.7 Service of Protest L.8 Solicitation Provisions Incorporated by Reference

SECTION M - EVALUATION FACTORS FOR AWARD

M.1 General M.2 Technical Evaluation Factors M.3 Technical Evaluation M.4 Price/Cost Evaluations M.5 Single or Multiple Awards M.6 Best Value Award Selection

SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 Introduction

B.1.1 Purpose

The purpose of this contract is to provide professional legal services within the scope of work specified in Section C. To that end, the Contractor shall furnish all services, personnel, equipment and supervision required to perform this work in accordance with the terms and conditions contained herein.

[Note: A consolidated list of acronyms used in this document is attached in Section J.1] B.1.2 Performance Period The period of performance for this contract includes a base year and four (4) one-year option periods.

Contract Term

B.2 Contract Type and Services This is a firm-fixed-price contract with fixed unit prices set forth in paragraph B.3. Debt collection cases will be assigned through the Nationwide Central Intake Facility (NCIF) using the Department’s Consolidated Debt Collection System (CDCS).

Contractors will be compensated for successful unsecured debt collection efforts (contract line item number (CLIN 0001)) on a contingency fee basis. Contingency fee payments will be made directly from the monies collected after it is first returned to the Government in accordance with the statement of work, Section C, herein. Contractors will be paid for successful secured debt collections and associated litigation efforts (CLINs 0002 through 0005) on a fixed fee/rate basis, for which funds will be incrementally obligated on the contract and adjusted as necessary to cover existing and/or anticipated workload. (See also Section G.6 Limitation of Funds) B.3 Contract Pricing Table

The following contract line item (CLIN) prices represent firm-fixed-prices per unit applicable to the entire term of the contract, including any option periods as may be exercised by the Government.

See Section J.2 for detailed CLIN descriptions.

B.4 Unauthorized Expenses

The following expenses are not authorized for reimbursement under this contract.

· Travel expenses (unless approved in advance by the AUSA and COTR)

· Skiptracing costs, including postal tracers and like expenses to locate debtors

· Costs of credit reports

· Transcripts of anything other than a judgment creditor examination, unless approved in advance by the AUSA and COTR

· Copying and telephone costs

· Postage and courier costs

· Postal look-up charges or verification fees

· On-line legal research End of Section B

SECTION C - STATEMENT OF WORK

C.1 Backgroundtc \l1 "C.2. Background

(a) 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. (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 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. Since the pilot project began, the Department has awarded contracts to private counsel in 18 Federal judicial districts.

(b) The use of private counsel to collect delinquent debts represents 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 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 Justice 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 Justice for litigation, are set out in the Federal Claims Collection Standards (FCCS) 31 C.F.R. Parts 900 - 904. Many of the unsecured debts that will be referred to the Contractor for litigation will have been (worked( by the Federal agencies, and again by private collection agencies, before they are sent to the Department for litigation. When the U.S. Attorneys receive these debts, they file suits against the debtors to obtain judgments against them. About 90% of these cases result in default or consent judgments against the debtors. However, many of the U.S. Attorneys may lack sufficient resources to pursue the enforcement of those judgments vigorously. Many of the secured debts that will be referred to the Contractor will similarly have been worked by the Federal agencies, and may have been the subject of work out agreements, moratoriums and various other arrangements intended to bring the accounts current.

C.2 Scopetc \l1 "C.1. Scope The Contractor shall furnish all legal services, including representation in negotiation, compromise, settlement, and litigation, to collect delinquent debts owed the United States. Such services include the collection and litigation for both secured and unsecured Federal debts, and participation in bankruptcy and other ancillary proceedings as may be required. All of the work to be performed under this contract shall be performed within the counties that comprise the United States Federal Judicial District for the Eastern District of Pennsylvania as set forth in 28 U.S.C. ( 118(a). All litigation required to collect unsecured debts must be brought in the United States District Court for the Eastern District of Pennsylvania. All litigation required to collect secured debts must be brought in the appropriate state or local courts, unless the local Assistant United States Attorney (AUSA) authorizes the Contractor to sue in the United States District Court for the Eastern District of Pennsylvania.

C.3 Applicable Statutes, Regulations, Standards and Rulestc \l1 "C.4. Applicable Statutes, Regulations, Standards, And Rules

(a) Applicable Statutes, Regulations, Standards and Rules. All collection, litigation, and enforcement efforts on the part of the contractor shall be in compliance and 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 Standard 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;

Soldiers' and Sailors' Civil Relief Act of 1940 (50 U.S.C. App.

§§ 501-592);

Executive Order No. 12988, 61 FR 4729, 1996 WL 46665 (Pres.);

Federal Rules of Civil Procedure; 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 and regulations pertaining to debt collection practices of particular agencies, or the Government as a whole, are incorporated by reference into this statement of work and shall be considered part of the contract. Violation of any applicable laws, regulations, or ethical standards shall be sufficient cause for termination of the contract for default pursuant to Section I, Clause 52.249-8.

C.4 AUSA Liaisontc \l2 "C.1.2.

Contractor Liaison and Supervision The Government will designate an AUSA in the Eastern District of Pennsylvania to be the primary point of contact for the Contractor in all cases and to assist the Contracting Officer’s Technical Representative (COTR) designated in Section G in monitoring and overseeing the work performed.

C.5 Automation Requirementstc \l1 "C.3. Required Equipment for Contract Performance.

(a) The United States District Court for the Eastern District of Pennsylvania currently requires electronic case filing (ECF) for the litigation of debts; therefore, Contractor will be required to register with ECF if they have not already done so at time of award.

(b) Also during the term of this contract, the Contractor will be required to use the Department of Justice's automated debt collection system, Consolidated Debt Collection System (CDCS). The Contractor shall be responsible for providing certain equipment to use ECF and/or the Department's automated system.

The current minimum requirements for the ECF and the Department's automated system are below. The Contractor shall contact the COTR prior to updating any software to avoid potential conflicts between CDCS and their computer system.

· Internet Access through an Internet Service Provider

· Scanner--Black-and-white, flatbed (at 200 dpl resolution); automatic document feeder, directly connected to the PC (not networked)

· Adobe PDF--Software to convert images and electronic documents to PDF format

· Web Browser--Internet Explorer 6.0

· Operating System—MS Windows 2000, Windows XP, Windows VISTA and Windows 7

· Modem--Minimum requirement is DSL or Broadband Connection

· Printer--Hewlett Packard compatible, laser, directly connected to PC (not networked)

· Word Processing--WordPerfect Version 12, full installation and/or Microsoft Office Suite

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

· Memory--128 MB of RAM (or higher)

· Disk Space--155 MB of HD

· USB Capable--USB plug-in capability supporting version 1.1 or higher

· Monitor--Minimum 15 inch SVGA

· Network --One 10 or 100 Mbps Ethernet Port (if using broadband)

C.5.1 System Training for Contractor Employeestc \l2 "C.3.1.

Training Contractor Employees

(a) Under a separate invitational travel authorization, the Government will pay the costs of training two (2) contractor employees (or more at the Department's discretion) to operate the Department's computer system. Employees selected by the Contractor for such 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 Department. If the Contractor's employees are required to attend training at a facility outside of the Judicial District, the Department will pay for such trainees' travel to the training facility and back to the Contractor's site, their hotel rooms, and will reimburse them for their meals and incidental expenses for up to one (1) week of training, at rates not to exceed those authorized and in effect for Government employee travel as set forth in GSA's Federal Travel Regulation. Other training materials may also be provided in lieu of traveling to a training facility for certain types of users. The training of any additional contractor employees may be arranged at the Contractor's expense.

(b) In addition, if the employees the Department trains to operate its system at its expense are transferred to other duties by the Contractor or leave the Contractor's employment, the Contractor shall be responsible for the costs of training any employees it selects to replace those previously trained at the Department's expense. The training of any such replacement employees may, at the Department's option, be conducted at the Contractor's office or at a facility designated by the Department. Regardless of whether the Department elects to train such replacement employees at the Department's training facility or send training personnel to the Contractor's site to train such replacement employees in the Contractor's own office, the Contractor shall be responsible for the cost of such training. Furthermore, if the COTR or local AUSA determines that the personnel the Contractor has assigned to handle the litigation of the Federal debts need additional training, or "refresher" training, the Contractor shall make such personnel available for such training at any facility designated by the Department at the Contractor's expense.

C.5.2 Approved "Generic" Written Instrumentstc \l2 "C.3.2.

Approved "Generic" Written Instruments All Contractors shall be required to use the approved "generic" written instruments available on the Department's automated system or from the local AUSA for all correspondence with the Federal debtors, and for all documents filed with the courts during the litigation to collect the debts referred to them pursuant to this contract. If a Contractor desires to send a debtor a letter, or file a document or pleading in court, the text of which departs from the approved "generic" instruments, the Contractor must receive approval of the different text from the local AUSA before sending or filing it. If it turns out that this "non-generic" document is one that the Contractor proposes to use frequently, the Contractor should so specify when submitting it to the local AUSA, so that it will be available to the Contractor in the future without advance approval.

C.5.3 CDCS Access Requirements

The Department will provide the Contractor secured access to the CDCS application using a Virtual Private Network. The network, called Justice Secure Remote Access (JSRA), will require the installation of a software client on each contractor PC used to access CDCS. Each contractor employee using CDCS will be provided a User ID and a security token by the Department to be used for authentication during application log-in process. The contractor agrees to install on each PC accessing 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 the PC operating system at an up-to-date security patch level at all times. All employees accessing the CDCS application will be subject to the security requirements set forth in Section H.10.1.2(a)(1). The Department will pay the costs for the JSRA software license for up to two contractor employees (or more at the Government's discretion).

C.6 Case Referrals Each Contractor will get some cases in which a U.S. Attorney may have obtained judgments against the debtors, but from whom no payments have been received in more than sixty days or that require additional enforcement action. A few cases in prejudgment status may also be referred to the Contractor from the U.S. Attorney's caseload, but most cases in prejudgment status will be new referrals from client agencies. Occasionally, pending cases may be transferred from another private counsel firm.

C.6.1 Referrals from Agenciestc \l2 "C.5.1.

Referrals From Client Agencies Referring agencies will send their debts to the Department's Nationwide Central Intake Facility (NCIF). The NCIF will screen the incoming cases and return those lacking essential information to the referring agencies. After initial screening and data entry into the Department's computer system at the NCIF, the NCIF will electronically forward the debts that are accepted for litigation to the Contractor, and mail them the agency files on such debts. At its discretion, the NCIF may forward new files first to the U.S. Attorney(s Office (USAO); the USAO will then forward new files to the Contractor.

C.6.2 Prohibited Referralstc \l2 "C.5.3.

Prohibited Referrals The FDRA presently precludes referral of cases arising under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) to a contractor. In addition, cases where the amount of indebtedness exceeds $100,000 may, or may not, be referred to the Contractor, at the Department's discretion.

C.6.3 "Commercial" Versus "Consumer" Referralstc \l2 "C.5.4.

"Commercial" Versus "Consumer" Referrals Debts owed to the United States frequently cannot be characterized as (consumer( or (commercial(. Contractor should assume that 90% of any unsecured debts to be referred to them for collection via litigation will be similar to "consumer" debts and 10% will be similar to "commercial" debts. The fixed percentage rate awarded for CLIN 0001, contingency fee, will reflect both types of unsecured debts.

C.7 Contingency Feestc \l1 "C.6. Contingency Fees The Contractor shall not deduct their contingency fees from sums collected from the federal debtors. Instead, Contractor shall direct all debtors to send all payments directly to the Department's lockbox. The lockbox bank will notify the Department's NCIF each day of all of the collections it receives and the NCIF will post the payments to the appropriate debtors' accounts. Contractor will receive specific instructions from the Department concerning the deposit of collections in the Department's lockbox.

C.7.1 Computation and Payment of Contingency Feestc \l2 "C.6.1.

Computation And Payment Of Contingency Fees The CDCS will automatically calculate the contingency fees due each Contractor each month, applying the percentage established for CLIN 0001 to the payments received from each Contractor's debtors during the preceding month, except as set forth below. Contingency fees due each Contractor will be paid monthly, in accordance with the Prompt Payment Act of 1982. If the Contractor finds a discrepancy between the amount of the contingency fee paid by the Department and the amount the Contractor believes it is due, the Contractor shall bring such discrepancy to the attention of the COTR.

C.7.1.1 Base Used To Compute Contingency Feestc \l3 "C.6.1.1. The Base Used To Compute Contingency Fees The base used to compute the Contractor's contingency fee on each account will be the total amount recovered by the Contractor during the billing period, with the following exceptions:

(a) The Department will not pay the Contractor any contingency fee on the amount of the Federal District Court filing fee set forth in 28 U.S.C. ( 1914(a), which 28 U.S.C. ( 1931(a) requires, "... be deposited into a special fund of the Treasury ... [for] ... the operation and maintenance of the courts ...." [Contractors shall always seek, pursuant to 28 U.S.C. ( 1920, to recover from Federal debtors any costs the Contractors incur in suing them. Since, however, Contractor will be suing on behalf of the United States they will not have to pay the filing fee called for in 28 U.S.C. ( 1914(a). But, 28 U.S.C. ( 2412(a)(2) 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. Because 28 U.S.C. ( 1931(a) requires that a specified amount of such filing fee be deposited in this "special fund," no contingency fee will be paid on this specified amount. Recently enacted amendments to (1914(a) and (1931(a) raised the District Court filing fee to $350.00 and require that $290.00 of that fee be paid into the special fund in the Treasury. Contractor shall collect the $350 Federal filing fees from the debtors, but the contingency fee will not apply to the $290 of the Federal filing fees that the law specifies must be paid into this "special fund" at the Treasury.]

(b) The Department will not pay the Contractor any contingency fee on any sums that the debtor voluntarily sends directly to the referring agency after the debt has been referred to the Contractor. [After Federal Agencies refer their debts to Justice for litigation, 31 C.F.R. ( 904.1(b) requires them to decline to answer any inquiries from their debtors and to refer all debtor inquiries to the U.S. Attorney's Office (USAO) or the private counsel to which their debts have been referred for litigation. On rare occasion, however, a debtor may send a payment on his or her debt directly to the agency to which the debt is owed. The Department will not pay any contingency fee on any such payment that a debtor may send directly to a referring agency, even after that debt has been referred to the Contractor for litigation.]

(c) The Department will not pay the Contractor any contingency or other fees on any sums 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.

C.7.1.2 Debts Collected Under the Treasury Offset Program

The Department does not presently refer private counsel debts to the Treasury Offset Program. On the rare occasion that the Department or a referring agency errs, and by mistake, refers a debt to the Treasury Offset Program that has already been referred to private counsel for litigation, the Department will not pay any contingency fee on any amounts the Government recovers from Federal debtors pursuant to the Treasury Offset Program. However, to further the Department's goal of maximizing the collection of debts owed to the United States, the Department may, at a future date, issue a policy under which private counsel debts will be referred to the Treasury Offset Program. At that time, the Contractor will be provided notice and further instructions with respect to debt referral to the Treasury Offset Program.

C.8 No Separate Suit Feestc \l1 "C.7. No Separate Suit Fees There shall be no suit fees paid under this contract.

C.9 Legal Services to Collect Unsecured Federal Debtstc \l1 "C.8. Legal Services to Collect Unsecured Federal Debts (CLIN 0001) 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 direction of the Contracting Officer, Contracting Officer's Technical Representative or the local AUSA.

C.9.1 Initial Contact with Debtortc \l2 "C.8.1.

Initial Contact With The 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 case file the NCIF refers to the Contractor. 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, however, within ten 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 debtor does not pay in full as a result of the initial contact, the Contractor shall immediately begin collection efforts. The Contractor's initial contact with the debtor, and all subsequent contacts, shall be in compliance with all Federal, state, and local statutes, regulations, and 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 paragraph C.3. If the debtor no longer resides in the judicial district, or the debtor cannot be located, the Contractor shall immediately return the case in accordance with the provisions of clause C.25.

C.9.2 Debtors Who Agree To Pay In Fulltc \l2 "C.8.2.

Debtors Who Agree To Pay In Full

(a) If a debtor acknowledges the debt and agrees to pay it in full immediately, the Contractor shall collect the total amount due and forward it to the lockbox designated by the Department no later than the next business day after the Contractor receives the payment from the debtor. If a debtor acknowledges the debt and agrees to pay it in full within thirty (30) days, the Contractor shall:

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

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

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

(4) Enter the required data on the agreement with the debtor into the Department's automated system to notify the NCIF to send the payment coupon and envelope to the debtor.

(b) The NCIF's system will notify the Contractor when the debtor's payment has arrived. The Contractor may hold such a case in prejudgment status for no longer than thirty (30) days, pending receipt of notification from the NCIF that the payment promised by the debtor arrived at the Department's lockbox, as agreed. Whenever full payment is not received within thirty (30) days, the NCIF will notify the Contractor and it shall immediately enter the executed consent judgment with the court and initiate efforts to enforce its collection.

C.9.3 Debtors Who Seek to Compromise or Settle Debtstc \l2 "C.8.3.

Debtors Who Seek To Compromise Or Settle Their 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, on 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 its local 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 that referred the debt for litigation, unless the agency has clearly indicated, in writing, that some other procedure would be acceptable. If the agency, and/or the Contractor's local 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) days and the Government's claim must be secured by entry of a consent judgment in the full amount of the debt owed.

C.9.3.1 Concurrences on Compromises or Settlementstc \l3 "C.8.3.1. Concurrences on Compromises or Settlements The Contractor's local AUSA and the agency that referred the debt for litigation must be consulted about the terms of any compromise or settlement the Contractor proposes to enter into with a debtor. If the referring agency does not agree with the Contractor that the debtor's offer should be accepted, the Contractor shall seek the advice of its local AUSA. The AUSA (after consultation as necessary with others in the Department) and the referring agency have 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 its local 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 federal debtors.

C.9.3.2 Consummation of a Compromisetc \l3 "C.8.3.2. Consummation of a Compromise Following consummation of a compromise, the Contractor shall promptly write the referring agency a letter informing it of the terms of the settlement and notifying the agency that the case should be closed. The agencies must be informed of any amounts of their debts that are written off or compromised because they may be required to report any such amounts to the Internal Revenue Service (IRS) to become taxable income to the debtor. Therefore, the Contractor must promptly notify the agency of any compromise or settlement so that the agency can comply with its IRS reporting requirements.

C.9.4 Debtors Who Seek To Repay Their Debts in Installmentstc \l2 "C.8.4.

Debtors Who Seek To Repay Their Debts In Installments If a debtor responds to the Contractor's contact, 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. If, based upon its review of the debtor's financial status, and in the Contractor's professional opinion, an installment repayment plan is justified, the Contractor may propose an installment repayment plan to the debtor.

C.9.4.1 Terms of Installment Payment Planstc \l3 "C.8.4.1. Terms of Installment Payment Plans Every installment payment plan shall 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 but, in any event, within three (3) years unless another time period is authorized through the local AUSA. It is the Department's policy not to compromise or forgive any amount of the debt due the United States unless the debtor agrees to pay the entire compromised amount in a single payment. Therefore, all installment repayment plans should 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. In addition, the Contractor shall require the debtor to pay an appropriate sum up front, as a condition of agreeing to accept an installment payment plan. The Contractor shall be liable to the Department for any amounts due the United States that it waives in violation of the terms of this policy, and the Department may deduct the amount of any such liability from any contingency fees payable to the Contractor. All installment payment plans shall 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 has been any change in the debtor's financial condition, which might be grounds for increasing the amount of the installment payments the debtor should be required to pay. All installment payment plans shall also provide specifically for increases in the debtor's monthly payments when justified by the debtor's updated financial condition. Installment payment plans should also require minimum payments of at least sixty dollars ($60.00) a month unless a lower amount is authorized through the local AUSA.

C.9.4.2 Consent Judgmentstc \l3 "C.8.4.2. Consent Judgments The Contractor shall require all debtors seeking to repay their unsecured debts in installments to execute a consent judgment for the full amount of the debt. Under appropriate circumstances, and for a reasonable period of time, usually not exceeding 180 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 shall 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. The Contractor shall immediately notify the referring agency of the judgment and the terms of any installment repayment plan it has agreed to with the debtor.

C.9.4.3 Debtors Paying on Installment Plans Who Movetc \l3 "C.8.4.3. Debtors Paying on Installment Plans Who Move If a debtor, whom the Contractor has gotten into an installment payment plan, moves out of the Contractor's district, 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 on time, unless the contract with that Contractor is terminated by the Department. 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 Department may require the Contractor to return the case, or to transfer it to a Contractor, or the United States Attorney, 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.

C.10 Initiation of Legal Actiontc \l1 "C.9. Initiation Of Legal Action If the debtor does not pay the entire outstanding balance within thirty (30) days of the Contractor's initial contact, or does not agree to an approved installment payment plan, and the U.S. Attorney has not already obtained a judgment against the debtor, the Contractor shall sue the debtor immediately. The Contractor shall bring suit against Federal debtors in time to ensure that any applicable statutes of limitations do not run. Under no circumstances, however, shall the Contractor initiate legal action on behalf of the United States if the applicable statute of limitations has run, 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 immediately notify the local AUSA.

C.10.1 Unsecured Federal Debt Jurisdictiontc \l2 "C.9.1.

Unsecured Federal Debt Jurisdiction In cases to collect unsecured debts, Contractor shall sue the Federal debtors in the United States District Court specified in clause C.2. The suits will be filed in the name of the (United States of America", as plaintiff. Therefore, Contractor will 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 debtors, or where litigation is underway, the U.S. Attorney will move to withdraw as counsel and substitute the Contractor unless the AUSA decides otherwise. The litigation file that accompanies each referral from the NCIF to the Contractor will 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 win a judgment against the debtor from the referring agency.

C.10.2 Other Direct Costs/Materialstc \l2 "C.9.2. Reimbursable Expenses Other direct costs authorized for reimbursement of unsecured debts are restricted to those described in section J.2, CLIN 0005A. All other expenses incurred by the Contractor must be captured in the contingency fee.

tc \l3 "C.9.2.1. Payment Procedures for Reimbursable ExpensesIn those states, such as New York, where the law requires the client to be ultimately responsible for litigation expenses paid by its lawyer, the Department will reimburse the Contractor for such expenses, as set forth in section C.10.2. The Contractor shall bill the Department monthly for any such authorized other direct costs/materials. The Department will reimburse the Contractor for authorized reimbursements once a month. Bills for such reimbursements will be paid within thirty (30) days, in accordance with the Prompt Payment Act of 1982. If the Contractor finds any discrepancy between the amount of its bill for reimbursements and the amount it is reimbursed by the Department, the Contractor shall bring such discrepancy to the attention of the COTR.

C.11 Debtor Paymentstc \l1 "C.10.

Debtor Payments The Contractor shall instruct debtors to send their payments directly to a bank lockbox to be specified by the Department, 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 such payment instrument. Under NO circumstance shall the Contractor deposit DOJ funds into its own account. 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 Department's bank lockbox no later than the next business day after they are received by the Contractor. 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 the United States, shall 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 Department, shall 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 to the Department for any interest lost by the Contractor's failure to forward all payments to the Department's lockbox on the next business day after the Contractor receives them.

C.11.1 Electronic Funds Transfers (EFTs)tc \l2 "C.10.1. Electric Funds Transfers (EFTs) All payments on debts of $50,000.00 or more should be made by Electronic Funds Transfers (EFT). Contractors shall contact their local 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.

C.11.2 Application of Paymentstc \l2 "C.10.2. Application of Payments The Contractor should be aware that the Department 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 Department's computer system will make all of these calculations for the Contractor automatically.

C.11.3 Delinquent Paymentstc \l2 "C.10.3. Delinquent Payments During hours specified by the Department, but not fewer than normal business hours, Contractors with authorized access will be allowed on-line "read-only" access to the financial information in the Department's computerized system's data base 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 ten (10) days overdue and shall demand immediate remittance of the delinquent amount.

C.12 Legal Services to Collect Secured Federal Debts -- Foreclosurestc \l1 "C.11 Legal Services to Collect Secured Federal Debts -- Foreclosure Actions (CLIN 0002) In addition or in the alternative to referring unsecured debts to Contractor for litigation, the Department may refer debts secured by real and/or personal property to Contractor for foreclosure proceedings. Contractor shall file and handle foreclosure proceedings against the collateral for such secured debts.

C.12.1 Source and Nature of Foreclosure Casestc \l2 "C.11.1. Source and Nature of Foreclosure Cases Contractor should assume that the majority of foreclosure cases to be referred to private counsel will be to foreclose on defaulted loans secured by single family houses and farms in rural areas under programs administered by the U.S. Department of Agriculture (USDA), foreclosures against various collateral securing loans from the Small Business Administration (SBA) and foreclosures against loans secured by single family houses from the Department of Veterans( Affairs. The collateral in foreclosure cases to be referred may include both real estate and chattels. Contractors should also be aware that foreclosures under farm programs are likely to be more complex than foreclosures under single family housing programs. Farm foreclosures, for example, tend to be very old. Most may be ten (10) to twelve (12) years old due to various legislative changes and class action lawsuits that have delayed their filing. They may involve several notes, many of which have been re-scheduled several times, and may also involve other lien holders, multiple parties, and chattels as well as real estate.

C.12.2 Jurisdiction for Foreclosure Casestc \l2 "C.11.2. Jurisdiction for Foreclosure Cases All foreclosure actions must be brought in the forum specified in section C.2.

C.12.3 Basic Foreclosure Taskstc \l2 "C.11.3. Basic Foreclosure Tasks The basic requirements involved in litigating foreclosure cases are to effect 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. The steps required to do so include, but are not limited to, those set forth above for CLIN 0002A. These steps are to be pursued at a fixed price based on the prices contained in Section B of the contract.

C.12.4 Multiple Agency Intereststc \l2 "C.11.4. 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 referring 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 immediately notify the AUSA and the referring agency and seek advice on how to proceed.

C.12.5 Other Direct Costs/Materialstc \l2 "C.11.5. Reimbursable Expenses The Government will reimburse the Contractor for certain expenses involved with handling foreclosure actions. A list of such reimbursable expenses is set forth in section J.2, CLIN 0005B.

C.12.5.1 Payment Procedures for Other Direct Costs/Materialstc \l3 "C.11.5.1. Payment Procedures for Reimbursable Expenses The Contractor shall bill the Department monthly for any authorized other direct costs/materials. The Department will reimburse the Contractor for authorized reimbursements once a month. Bills for such reimbursements will be paid within thirty (30) days, in accordance with the Prompt Payment Act of 1982. If the Contractor finds any discrepancy between the amount of its bill for reimbursements and the amount it is reimbursed by the Department, the Contractor shall bring such discrepancy to the attention of the Department's Office of Debt Collection Management (DCM), which will try to reconcile the discrepancy. Any discrepancies that can not be reconciled prior to the next billing cycle shall be referred to the Administrative Contracting Officer (ACO) for resolution.

C.12.6 Recall or Referral of Partially Completed Foreclosure Casestc \l2 "C.11.6. Recall or Referral of Partially Completed Foreclosure Cases C.12.6.1 Prorating Fee for Partially Completed/Recalled Foreclosure Casestc \l3 "C.11.6.1.