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089340 1 (1970-09-02)

handle is hein.gao/gaobacvhm0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE O& -WASHINGTON, D.C. 20548 SEP 2 1970 CIVIL DIVISION Dear Mr. Rhodes; e have examined into selected aspects of the Veterans Administration's (VA) career residency program. Based on our examination, we believe that improvements are needed in VA's procedures relating to the collection of debts due the VA from former career residents who elect to pay liquidated damages in lieu of performing services they were required to provide under contractual agreements entered into with VA. Our work was performed at the VA Central Office (VACO) and at the VA Center, Los Angeles, California. Our review at the Center shoved that 53 career residents, or about 52 percent, of a total of 101 physicians and dentists appointed to the ca- reer residency program since July 1961, had breached their contracts regarding the performance of obligated service. Liquidated damages amounted to about $400,000. The terms of the standard contract entered into between each career resident and VA provide that amounts career residents owe VA as restitution for failure to perform obligated service are to be completely liquidated within 2 years from the date of breach of the contract. For 20 of the 53 residents, restitution was not made within the pre- scribed 2-year repayment period. For 10 of the 20 breached contracts, it took from 1 to 41 months beyond the prescribed 2-year period to liquidate the debts. For the other 10 breached contracts, the debts had not been completely liquidated at the time of our review even though from 6 to 44 months had elapsed beyond the repayment period. Standards for collection of debts owed the United States are prescribed in Title 4, Chapter II, Code of Federal Regulations. The standards provide that Federal agencies shall take aggressive action, on a timely basis with effective follow-up to collect all claims of the United States arising out of the agencies' activities. In addition, the standards provide that (1) whenever possible, claims should be collected in full in one lump sum and (2) if installment payments are accepted, the payments should be sufficient in size and frequency to liquidate the Government's claim in not more than 3 years. VA Manual MLP-4, Part 1, Chapter 5, and VA Regulations 910-921 implement the provisions of the foregoing collection standards. However, neither the manual nor the regulations make specific reference to collection of debts arising from breach of career residents' contracts. Furthermore, officials 3/O (1o

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