21:0101(20)NG - NFFE Local 29 and Army Engineer District, Kansas City, MO; NFFE Local 1363, Republic Of Korea and Army Garrison, Yongsan, Korea -- 1986 FLRAdec NG



[ v21 p101 ]
21:0101(20)NG
The decision of the Authority follows:


 21 FLRA No. 20
 
 NATIONAL FEDERATION OF FEDERAL 
 EMPLOYEES, LOCAL 29
 Union
 
 and                                  Case No. 0-NG-467
                                            10 FLRA 550
 
 U.S. ARMY ENGINEER DISTRICT, 
 KANSAS CITY, MO.
 Agency
 
 NATIONAL FEDERATION OF FEDERAL 
 EMPLOYEES, LOCAL 1363, 
 REPUBLIC OF KOREA
 Union
 
 and                                   Case No. 0-NG-450
                                            10 FLRA 560
 
 U.S. ARMY GARRISON, 
 YONGSAN, KOREA
 Agency
 
 
                 CONSOLIDATED DECISION ON RECONSIDERATION
 
    I. Statement of the Case
 
    These cases are before the Authority pursuant to the Authority's
 Order granting the Agency's motions for reconsideration of the
 Authority's December 3, 1982, decisions in National Federation of
 Federal Employees, Local 29 and U.S. Army Engineer District, Kansas
 City, Mo., 10 FLRA 550 (1982) and National Federation of Federal
 Employees, Local 1363, Republic of Korea and U.S. Army Garrison,
 Yongsan, korea, 10 FLRA 560 (1982).  The sole question presented is the
 impact that the Debt Collection Act of 1982 has upon the negotiability
 of the proposals herein.
 
    In the previous decisions in these cases, the Authority found the
 following proposals to be within the duty to bargain:
 
                         Union Proposal (0-NG-467)
 
          1. That all employees be notified, on travel orders and
       annually of the requirement to file travel vouchers no later than
       15 days after completion of travel;
 
          2. That employees that do not comply with paragraph 1, or who
       are indebted to the U.S. Government be officially notified that
       payment be made within 15 days of the receipt of the notice;
 
          3. That payment becomes delinquent after 30 days from the date
       of the notice and payroll deductions will be initiated;  unless a
       waiver or payment arrangements have been made;
 
          4. That no interest charge be made.  (Interest charge for
       delinquent unused travel advances).  (Only the underscored
       language is in dispute.)
 
                         Union Proposal (0-NG-450)
 
       We propose that members of our bargaining units not be subject to
       late payment charges.
 
    The proposals concern the conditions under which employees will
 reimburse the Agency for monies they have received through advances
 where the work-related expenses actually incurred are less than the
 advance.  The proposals were in dispute only insofar as they provided
 that interest and late payment charges would not be assessed.  The
 original finding of negotiability was premised upon the conclusion that
 an agency has discretion under the Federal Claims Collection Standards
 (FCCS), 4 CFR Parts 101-105, /1/ and the Treasury Fiscal Requirements
 Manual (TFRM).
 
    Prior to the issuance of the Authority s decisions after the parties'
 submissions had been filed, Congress enacted the Debt Collection Act of
 1982, Pub.L. No. 97-365, 96 Stat. 1749 (1982) (the Act).  Accordingly,
 the Agency's motions for reconsideration were granted so that the
 Authority could consider the impact of the Act upon the negotiability of
 the Union's proposals.  Upon careful consideration of the entire record,
 including the parties' contentions, the Authority makes the following
 determinations.
 
    II.  Motion to Strike
 
    The Union moved that portions of the Agency's statement of position
 be struck because they exceeded the scope of the issue upon which the
 Authority granted reconsideration.  The Authority's Order granting the
 Agency's motions for reconsideration requested the parties to submit
 statements of position addressing the "issue of the impact that the Debt
 Collection Act of 1982 has upon the negotiability of the proposals
 involved." The Authority finds that the Agency's statement raises issues
 in addition to that which the Authority's Order invited the parties to
 address.  Accordingly, the Union's motion is granted, and the Authority
 will consider only those arguments which concern the impact of the Debt
 Collection Act upon the disputed proposals.
 
    III.  Positions of the Parties
 
    The Agency contends that the Debt Collection Act of 1982 does not
 apply to these proposals.
 
    The Union contends that the proposals are within the duty to bargain
 because the Debt Collection Act authorizes an agency to waive the
 collection of interest and late payment charges.
 
    IV.  Analysis
 
    A. Applicability of the Debt Collection Act
 
    The major purpose of the Debt Collection Act was to facilitate
 collection procedures in the federal government by expanding the debt
 collection tools available to federal agencies.  /2/ The Agency contends
 that the Act covers only general debts owed the United States but does
 not apply to travel advances under 5 U.S.C. 5705, which preceded the Act
 and authorizes repayment of delinquent unused travel advances through
 setoff against an employee's pay.  /3/ The legislative history of the
 Act shows that the Act's purpose was primarily to facilitate the
 collection of "general debts" owed the government, for example, by
 authorizing setoff against a federal employee's salary under 5 U.S.C.
 5514 for general debts such as student loans or overpayment of Veterans
 Administration (VA) benefits.  However, contrary to the Agency's
 contentions, the coverage of the Act was not intended to be limited
 solely to such "general debts," but also to include those debts such as
 unused travel advances for which salary offset was already authorized.
 The Senate Report accompanying the Act states:
 
       The type of indebtedness that may be deducted would include, but
       is not necessarily limited to, erroneous payments made to the
       employees, overpayments of benefits, salary or other allowances,
       travel allowances, federal loans or guaranteed or insured loans,
       or other indebtedness resulting from stolen property.  /4/
 
    Furthermore, while subsection (c) of section 5514 provides that the
 salary offset provisions of the Act do not modify existing statutes
 which provide for salary offset, that subsection does not prevent the
 remaining provisions of the Act from being applied to debts covered by
 the existing statutes.  The Authority concludes that the Debt Collection
 Act applies to the repayment of unused travel allowances.
 
    B. Agency Discretion to Waive Interest Under the Act
 
    The section of the Act most relevant to the proposals in dispute, 31
 U.S.C. 3717, requires an agency to charge interest and late payment
 penalties on outstanding debts owed to the United States Government.
 Subsections (a) and (e) of section 3717 provide in relevant part:
 
       (a)(1) The head of an executive or legislative agency shall charge
       a minimum annual rate of interest on an outstanding debt on a
       United States Government claim owed by a person(.) (e) The head of
       an executive or legislative agency shall assess on a claim owed by
       a person- (1) a charge to cover the cost of processing and
       handling a delinquent claim;  and
 
          (2) a penalty charge of not more than 6 percent a year for
       failure to pay a part of a debt more than 90 days past due.
 
    The word "shall" in subsections (a) and (e) was intended by Congress
 to be mandatory and imperative, /5/ leaving agencies without discretion
 to waive interest and penalty charges absent express exception.  The
 mandatory nature of the interest and penalty provisions is consistent
 with the numerous references in the legislative history of the Act
 concerning the importance of the interest provisions to the overall
 purpose of the Act.  For example, the Senate Report accompanying the Act
 found the sizeable amount of delinquent debt owed the United States
 Government "disturbing." It cited the failure of agencies to regularly
 charge interest and assess late payment penalties among the reasons for
 this large delinquent debt.  /6/ In discussing the requirement that
 agencies assess interest and late payment charges, the Report states
 that:
 
          Generally, there is either no assessment for interest and
       penalties on debts owed the government or, if there is, the
       assessment is at rates that are considerably below market rates.
       This is in spite of the joint GAO/Justice Department regulations
       issued in the Federal Claims Collection Standards in April 1979
       and subsequent Treasury regulations which require agencies to
       charge debtors interest on overdue payments.  These include
       Agriculture, Labor, HUD, Interior, Defense, Health and Human
       Services, Veterans, and Treasury (except IRS).  Other departments
       and agencies, such as Energy, assess interest but lack uniform
       department policies and procedures for doing so.
 
          In the absence of interest charges for delinquent payments,
       debtors have little or no incentive to make timely payments.
       Also, debtors are likely to pay their private sector debts first
       and their government debts last.  The Committee has concluded that
       this factor is a major contributor to the growing amount of
       delinquent debt owed the government.  /7/
 
    Thus, the legislative history of the Debt Collection Act indicates
 that Congress considered the uniform assessment of interest and Late
 payment charges by federal agencies to be a central feature of its
 program to improve the government's debt collection procedures.
 
    The Union contends that subsection (g) of section 3717, /8/ which
 provides that the interest requirement of the Act does not apply where a
 "contract" prohibits the charging of interest or assessment of late
 payment charges, authorizes an agency to enter into a collective
 bargaining agreement which contains a provision waiving the application
 of the required interest and penalty charges.  The legislative history
 of the Debt Collection Act does not address the question of whether the
 term "contract" includes a collective bargaining agreement.  Section
 3717(g)(1) must, therefore, be read in light of the "provisions of the
 whole law, and ... its object and policy.  Mastro Plastics Corp. v.
 NLRB, 350 U.S. 270, 285 (1956) (quoting United States v. Boisdore's
 Heirs, 8 How. 113, 122).  In view of the importance attached by Congress
 to the interest and penalty requirements of the Act, any exceptions to
 section 3717 should be narrowly construed so as not to frustrate the
 Congressional purpose.  If section 3717(g)(1) were read to authorize an
 agency to negotiate with an exclusive representative concerning the
 waiver of interest and penalty charges, this would result in the
 application of such charles on a bargaining unit-by-bargaining unit
 basis contrary to the Congressional intent that agencies uniformly
 assess interest and late payment charges on delinquent debts.
 
    Additionally, the legislative history indicates that Congress
 intended provisions such as 3717(g)(1) to apply where the waiver of
 interest and penalty charges would further the social objectives of
 government programs being administered by an agency.  The Senate Report
 accompanying the Act states in its discussion of section 3717:
 
       These provisions will generate an incentive for the debtor to pay
       while protecting the debtor and the social objective of the
       government programs by allowing flexibility in the assessment of
       the interest and penalty charges.  /9/
 
    the types of government programs most often discussed in the
 legislative history of the Act are those involving loans administered by
 agencies such as the Department of Education, Veterans Administration,
 Small Business Administration, and Housing and Urban Development, /10/
 in which the "contracts" executed by the agencies are specifically
 concerned with the terms governing the repayment of money to the United
 States.  The Authority finds that the term "contract" in 31 U.S.C.
 3717(g)(1) refers to those contracts which specifically concern the
 payment or repayment of money pursuant to a particular government
 program, and not to contracts in the general sense, such as collective
 bargaining agreements.  /11/ Accordingly, the Authority concludes that
 31 U.S.C. 3717(9)(1) does not authorize an agency to enter into a
 collective bargaining agreement which provides that the interest
 required by section 3717(a) and the late payment penalties required by
 section 3717(e) not be charged.
 
    Furthermore, neither is this type of waiver authorized bY 31 U.S.C.
 3717(h), which provides:
 
          (h) In conformity with standards prescribed jointly by the
       Attorney General and the Comptroller General, the head of an
       executive or legislative agency may prescribe regulations
       identifying circumstances appropriate to waiving collection of
       interest and charges under subsections (a) and (e) of this
       section.  A waiver under the regulations is deemed to be
       compliance with this section.
 
    The corresponding regulation, 4 CFR 102.13(9) of the revised FCCS,
 /12/ provides in relevant part:
 
       (A)n agency may waive, in whole or in part, the collection of
       interest, penalties, and/or administrative costs assessed under
       this section under the criteria specified in Part 103 of this
       chapter relating .to the compromise of claims (without regard to
       the amount of the debt), or if the agency determines that
       collection of these charges would be against equity and good
       conscience or not in the best interests of the United States.
       Waiver ... may be exercised only in accordance with regulations
       issued by the agency identifying the standards and appropriate
       circumstances for waiver.  Examples of situations which agencies
       may consider including in their interest waiver regulations are:
       (1) Waiver of interest pending consideration of a request for
       reconsideration, administrative review, or waiver of the
       underlying debt under a permissive statute, and (2) waiver of
       interest where the agency has accepted an installment plan under
       102.11 of this Part, there is no indication of fault or lack of
       good faith on the part of the debtor, and the amount of interest
       is large enough in relation to the size of the installments that
       the debtor can reasonably afford to pay that the debt will never
       be repaid.
 
    Thus, an agency may waive interest and penalty charges under this
 provision only if the collection of those amounts is against "equity and
 good conscience or not in the best interest of the United States." /13/
 The comments accompanying the regulation state that "equity and good
 conscience' is generally satisfied where the indebtedness resulted from
 the agency's administrative error and there is no indication of fraud,
 misrepresentation, fault or lack of good faith on the part of the
 debtor." /14/ The Authority finds that section 3717(h) and the
 implementing regulation were intended to permit an agency to waive
 interest and penalty charges in individual cases where the agency deemed
 such waiver to be appropriate in light of the standards set forth in the
 regulation, but were not intended to authorize a blanket waiver of these
 charges as contended by the Union.  Accordingly, the Authority concludes
 that the waiver of interest and penalty charges on the delinquent
 repayment of unused travel advances would not be consistent with the
 standards for waiver set forth in the regulation as they were intended
 to be interpreted and applied by their promulgators.
 
    Finally, when Congress did intend the provisions of the Debt
 Collection Act to interact with the collective bargaining process, it
 expressed that intent by making specific reference to the Federal
 Service Labor-Management Relations Statute (the Statute).  For example,
 section 5514(b)(2) provides that no regulation prescribed to carry out
 subsection (a)(2) of that section, which establishes procedures to be
 followed by an agency seeking to collect a debt through deductions from
 an employee's salary, shall be considered a Government-wide rule or
 regulation for purposes of section 7117(a) of the Statute.  No similar
 reference to the Statute appears in 31 U.S.C. 3717 that would indicate
 Congress' intent to allow the interest requirement of the Act to be
 subject to the collective bargaining process.
 
    V. Conclusion
 
    Based on the foregoing analysis, the Authority concludes that the
 proposals are inconsistent with the Debt Collection Act of 1982 and the
 implementing regulations in the revised FCCS.  Since the Union proposals
 here are contrary to law and regulation, the Authority now finds it
 appropriate to vacate its prior decisions in U.S. Army Engineer
 District, Kansas City, 10 FLRA 550, and U.S. Army Garrison, Yongsan,
 Korea, 10 FLRA 560.
 
    VI.  Order
 
    Accordingly, IT IS ORDERED that the petitions for review in 10 FLRA
 550 and 10 FLRA 560 be now, and they hereby are, dismissed.
 
    Issued, Washington, D.C. March 20, 1986
 
                                       (s)---
                                       Jerry L. Calhoun, Chairman
                                       (s)---
                                       Henry B. Frazier III, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
 
    /1/ The regulations in effect at the time U.S. Army Engineer
 District, kansas City and U.S. Army Garrison, Yongsan, Korea were
 decided have been superseded by the revised Federal Claims Collection
 Standards (hereinafter referred to as the revised FCCS) issued jointly
 by the General Accounting Office and the Department of Justice pursuant
 to the Debt Collection Act of 1982.  The revised FCCS became effective
 April 9, 1984, and are codified at 4 CFR Parts 101-105.
 
 
    /2/ S. Rep. No. 378, 97th Cong., 2d Sess. 1-2, reprinted in 1982 U.S.
 Code Cong. & Ad.  News 3377-78.
 
 
    /3/ 5 U.S.C. 5705 provides:
 
    5705. Advancements and deductions
 
    An agency may advance, through the proper disbursing official, to an
 employee entitled to per diem or mileage allowances under this
 subchapter, a sum considered advisable with regard to the character and
 probable duration of the travel to be performed.  A sum advanced and not
 used for allowable travel expenses is recoverable from the employee or
 his estate by--
 
          (1) setoff against accrued pay, retirement credit, or other
       amount due the employee;
 
          (2) deduction from an amount due from the United States;  and
 
          (3) such other method as is provided by law.
 
 
    /4/ S. Rep. No. 97-378 at 23, 1982 U.S. Code Cong. & Ad. News at
 3399.
 
 
    /5/ Detailed Explanation Prepared by the Office of Law Revision
 Counsel, accompanying Revision of Title 31, U.S.C.A., Pub.L. No. 97-452,
 96 Stat. 2467, 128 Cong. Rec. H9528 (1982), reprinted in 1982 U.S. Code
 Cong. & Ad.  News 4301, 4302.
 
 
    /6/ S. Rep. No. 97-378 at 3, 1982 U.S. Code Cong. & Ad. News at 3379.
 
 
    /7/ S. Rep. 97-378 at 17, 1982 U.S. Code Cong. & Ad.  News at 3393.
 In addition to the Report, testimony before Congress indicated that the
 government loses a substantial amount of revenue because of the failure
 of agencies to charge interest on delinquent debts.  See, e.g., Debt
 Collection Act of 1981:  Hearings on S. 1249 Before the Senate Comm. on
 Governmental Affairs, 97th Cong., 1st Sess.  (1981) (hereinafter Debt
 Collection Act), at 50 (statement of David A. Stockman, Director, OMB),
 and 83-84 (statement of Milton J. Socolar, Acting Comptroller General,
 GAO);  Statement of Charles A. Bowsher, Comptroller General, Concerning
 Federal Departments and Agencies Failure to Collect Audit-Related Debts,
 before the House Comm. on Governmental Operations, Subcomm. on
 Legislation and National Security, at 4-5 (Feb. 24, 1982).
 
 
    /8/ 31 U.S.C. 3717(g)(1) provides in relevant part:
 
       (g) This section does not apply-- (1) if a statute, regulation
       required by statute, loan agreement, or contract prohibits
       charging interest or assessing charges or explicitly fixes the
       interest or charges(.)
 
 
    /9/ Rep. No. 97-378 at 17, 1982 U.S. Code Cong. & Ad. News at 3393.
 
 
    /10/ See S. Rep. No. 97-378 at 3, U.S. Code Cong. & Ad. News at 3379;
  Debt Collection Act, supra note 9, at 40 (testimony of Hal Steinberg,
 OMB).
 
 
    /11/ Further support for this conclusion is found in the
 Congressional Budget Office's cost estimate with regard to the Senate
 till, which stated that "(s)ection 10 would revise procedures for
 interest calculations and require the assessment of other penalties on
 debt more than 90 days delinquent, unless specific ... contract
 provisions prohibit such charges." S. Rep. No. 287, 97th Cong., 1st
 Sess. 15.  Additionally, in the legislative history, one example of the
 type of contract provision envisioned section 3717(9)(1) makes reference
 to such a "specific contract." Milton J. Socolar, Acting Comptroller
 General, stated in his testimony before the Senate Committee on
 Governmental Affairs that "we think (with respect to low interest rate
 loans) that some agencies should provide in the contracts that they
 execute for those loans, upon becoming delinquent, should revert at that
 point to an interest rate that is commensurate with t