[Code of Federal Regulations]

[Title 14, Volume 5]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 14CFR1261.414]



[Page 348-350]

 

                     TITLE 14--AERONAUTICS AND SPACE

 

                          SPACE ADMINISTRATION

 

PART 1261_PROCESSING OF MONETARY CLAIMS (GENERAL)--Table of Contents

 

 Subpart 1261.4_Collection of Civil Claims of the United States Arising 

      Out of the Activities of the National Aeronautics and Space 

                          Administration (NASA)

 

Sec. 1261.414  Compromise of claims.



    (a) Designated NASA officials (see Sec. Sec. 1261.402 and 1261.403) 

may compromise claims for money or property arising out of the 

activities of the agency where the claim, exclusive of interest, 

penalties, and administrative costs, does not exceed $20,000, prior to 

the referral of such claims to the General Accounting Office, or to the 

Department of Justice for litigation. The Comptroller General may 

exercise such compromise authority with respect to claims referred to 

the General Accounting Office (GAO) prior to their further referral for 

litigation. Only the Comptroller General may effect the compromise of a 

claim that arises out of an exception made by the GAO in the account of 

an accountable officer, including a claim against the payee, prior to 

its referral by the GAO for litigation.

    (b) When the claim, exclusive of interest, penalties, and 

administrative costs, exceeds $20,000, the authority to accept the 

compromise rests solely with the Department of Justice. NASA should 

evaluate the offer, using the factors set forth in paragraphs (c) 

through (f) of this section, and may recommend compromise for reasons 

under one, or more than one, of those paragraphs. If NASA then wishes to 

accept the compromise, it must refer the matter to the Department of 

Justice, using the Claims Collection Litigation Report. See Sec. 

1261.417(e) or 4 CFR 105.2(b). Claims for which the gross amount is over 

$200,000 shall be referred to the Commercial Litigation Branch, Civil 

Division, Department of Justice, Washington, DC 20530. Claims for which 

the gross original amount is $200,000 or less shall be referred to the



[[Page 349]]



United States Attorney in whose judicial district the debtor can be 

found. The referral should specify the reasons for the agency's 

recommendation. If NASA has a debtor's firm written offer of compromise 

which is substantial in amount and the agency is uncertain as to whether 

the offer should be accepted, it may refer the offer, the supporting 

data, and particulars concerning the claim to the General Accounting 

Office or to the Department of Justice. The General Accounting Office or 

the Department of Justice may act upon such an offer or return it to the 

agency with instructions or advice. If NASA wishes to reject the 

compromise, GAO or Department of Justice approval is not required.

    (c) A claim may be compromised pursuant to this section if NASA 

cannot collect the full amount because of the debtor's inability to pay 

the full amount within a reasonable time, or the refusal of the debtor 

to pay the claim in full and the Government's inability to enforce 

collection in full within a reasonable time by enforced collection 

proceedings. In determining the debtor's inability or refusal to pay, 

the following factors, among others, may be considered:

    (1) Age and health of the debtor;

    (2) Present and potential income;

    (3) Inheritance prospects;

    (4) The possibility that assets have been concealed or improperly 

transferred by the debtor;

    (5) The availability of assets or income which may be realized by 

enforced collection proceedings; and

    (6) The applicable exemptions available to the debtor under State 

and Federal law in determining the Government's ability to enforce 

collection. Uncertainty as to the price which collateral or other 

property will bring at forced sale may properly be considered in 

determining the Government's ability to enforce collection. The 

compromise should be for an amount which bears a reasonable relation to 

the amount which can be recovered by enforced collection procedures, 

having regard for the exemptions available to the debtor and the time 

which collection will take.

    (d) A claim may be compromised if there is a real doubt concerning 

the Government's ability to prove its case in court for the full amount 

claimed, either because of the legal issues involved or a bona fide 

dispute as to the facts. The amount accepted in compromise in such cases 

should fairly reflect the probability of prevailing on the legal 

question involved, the probabilities with respect to full or partial 

recovery of a judgment, paying due regard to the availability of 

witnesses and other evidentiary support for the Government claim, and 

related pragmatic considerations. In determining the litigative risks 

involved, proportionate weight should be given to the probable amount of 

court costs and attorney fees pursuant to the Equal Access to Justice 

Act which may be assessed against the Government if it is unsuccessful 

in litigation. See 28 U.S.C. 2412.

    (e) A claim may be compromised if the cost of collecting the claim 

does not justify the enforced collection of the full amount. The amount 

accepted in compromise in such cases may reflect an appropriate discount 

for the administrative and litigative costs of collection, paying heed 

to the time which it will take to effect collection. Costs of collecting 

may be a substantial factor in the settlement of small claims, but 

normally will not carry great weight in the settlement of large claims. 

In determining whether the cost of collecting justifies enforced 

collection of the full amount, it is legitimate to consider the positive 

effect that enforced collection of some claims may have on the 

collection of other claims. Since debtors are more likely to pay when 

first requested to do so if an agency has a policy of vigorous 

collection of all claims, the fact that the cost of collection of any 

one claim may exceed the amount of the claim does not necessarily mean 

that the claim should be compromised. The practical benefits of vigorous 

collection of a small claim may include a demonstration to other debtors 

that resistance to payment is not likely to succeed.

    (f) Enforcement policy. Statutory penalties, forfeitures, or debts 

established as an aid to enforcement and to compel



[[Page 350]]



compliance may be compromised pursuant to this part if the agency's 

enforcement policy in terms of deterrence and securing compliance, both 

present and future, will be adequately served by acceptance of the sum 

to be agreed upon. Mere accidental or technical violations may be dealt 

with less severely than willful and substantial violations.

    (g) Compromises payable in installments are to be discouraged. 

However, if payment of a compromise by installments is necessary, a 

legally enforceable agreement for the reinstatement of the prior 

indebtedness less sums paid thereon and acceleration of the balance due 

upon default in the payment of any installment should be obtained, 

together with security in the manner set forth in Sec. 1261.411, in 

every case in which this is possible.

    (h) If the agency's files do not contain reasonably up-to-date 

credit information as a basis for assessing a compromise proposal, such 

information may be obtained from the individual debtor by obtaining a 

statement executed under penalty of perjury showing the debtor's assets 

and liabilities, income, and expenses. Forms such as Department of 

Justice Form OBD-500 or OBD-500B may be used for this purpose. Similar 

data may be obtained from corporate debtors using a form such as 

Department of Justice Form OBD-500C or by resort to balance sheets and 

such additional data as seems required. Samples of the Department of 

Justice forms are available from the Office of the NASA General Counsel. 

Neither a percentage of a debtor's profits nor stock in a debtor 

corporation will be accepted in compromise of a claim. In negotiating a 

compromise with a business concern, consideration should be given to 

requiring a waiver of the tax-loss-carry-back rights of the debtor.

    (i) Joint and several liability. When two or more debtors are 

jointly and severally liable, collection action will not be withheld 

against one such debtor until the other or others pay their 

proportionate shares. NASA will not attempt to allocate the burden of 

paying such claims as between the debtors but will proceed to liquidate 

the indebtedness as quickly as possible. Care should be taken that a 

compromise agreement with one such debtor does not release the agency's 

claim against the remaining debtors. The amount of a compromise with one 

such debtor shall not be considered a precedent or as morally binding in 

determining the amount which will be required from other debtors jointly 

and severally liable on the claim.