Overview
This section outlines the authority and governing standards for the government to compromise (settle for less than the full amount) contractor debts that are valued under $100,000. It explicitly restricts the authority of Contracting Officers to settle these debts unless they are granted specific agency permission.
Key Rules
- Threshold: The authority to compromise applies only to debts under $100,000, excluding interest.
- Governing Standards: Compromises must be executed in accordance with the Federal Claims Collection Standards (31 CFR part 902) and specific agency regulations.
- Limited Authority: Only a "designated agency official" has the power to compromise a debt.
- Contracting Officer Restriction: Contracting officers (COs) do not have inherent authority to compromise debts; they may only do so if specifically authorized by their agency's internal procedures.
Practical Implications
- Contractors seeking a debt settlement or "compromise" cannot assume their Contracting Officer has the power to negotiate the debt amount; they must instead engage with the specific agency official designated for debt collection and claims.
- Because interest is excluded from the $100,000 threshold, the total amount waived could potentially exceed $100,000 once accrued interest is factored in.