Sec.  1.1919   Contracting for collection services.

   (a) Subject to the provisions of paragraph (b) of this section, the
   Commission may contract with private collection contractors, as defined in
   31 U.S.C. 3701(f), to recover delinquent debts. In that regard, the
   Commission:

   (1) Retains the authority to resolve disputes, compromise debts, suspend or
   terminate collection activity, and refer debts for litigation;

   (2) Restricts the private collection contractor from offering, as an
   incentive for payment, the opportunity to pay the debt less the private
   collection contractor's fee unless the Commission has granted such authority
   prior to the offer;

   (3) Specifically requires, as a term of its contract with the private
   collection contractor, that the private collection contractor is subject to
   the Privacy Act of 1974 to the extent specified in 5 U.S.C. 552a(m), and to
   applicable Federal and state laws and regulations pertaining to debt
   collection practices, including but not limited to the Fair Debt Collection
   Practices Act, 15 U.S.C. 1692; and

   (4) The private collection contractor is required to account for all amounts
   collected.

   (b) Although the Commission will use government-wide debt collection
   contracts to obtain debt collection services provided by private collection
   contractors, the Commission may refer debts to private collection
   contractors pursuant to a contract between the Commission and the private
   collection contractor in those situations where the Commission is not
   required to transfer debt to the Secretary of the Treasury for debt
   collection.

   (c) Agencies may fund private collection contractor in accordance with 31
   U.S.C. 3718(d), or as otherwise permitted by law.

   (d) The Commission may enter into contracts for locating and recovering
   assets of the United States, such as unclaimed assets, but it will first
   establish procedures that are acceptable to Treasury before entering into
   contracts to recover assets of the United States held by a state government
   or a financial institution.

   (e) The Commission may enter into contracts for debtor asset and income
   search reports. In accordance with 31 U.S.C. 3718(d), such contracts may
   provide that the fee a contractor charges the Commission for such services
   may be payable from the amounts recovered, unless otherwise prohibited by
   statute. In that regard, fees for those services will be added to the amount
   collected and are part of the administrative collection costs passed on to
   the debtor. See  Sec. 1.1940.