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By Debt Management Services, Private Collection Division

Financial Management Service (FMS) continues to reap the benefits of maintaining contracts with Private Collection Agencies (PCAs) in order to collect and resolve delinquent federal debt. Since 1998, FMS has worked with PCAs to utilize their expertise in locating debtors, establishing payment agreements, and administratively resolving debts. In 2001, FMS expanded the collection tools available under this contract to include administrative wage garnishment. Administrative wage garnishment allows federal agencies, and the designated PCAs under contract with FMS, to garnish the wages of a private sector individual without the issuance of a court order. The addition of administrative wage garnishment to FMS’s collection program has increased collections and benefited the federal government. The PCAs have collected $27 million as a result of administrative wage garnishment since the collection tool was introduced.
    
Over the ten-year time period that FMS has been utilizing PCAs, FMS has continued to improve the PCA contract to provide better services to the Federal Program Agencies (FPA) and to create incentives for PCA performance. FMS has worked on more effective ways to distribute debts to PCAs, added incentives for resolving debts, added a new category for resolving debts, and improved how PCAs are evaluated. These changes have led to improved service and competition among the PCAs. These continuous contract improvements spur higher collections and have been an effective way in maximizing the expertise of private sector contractors. 

In March 2007, FMS announced the award of its third debt collection contract. The five contractors selected were: Diversified Collection Services, Inc. in Lathrop, CA; Linebarger, Goggan, Blair & Sampson, LLP in Houston, TX; Pioneer Credit Recovery, Inc. in Arcade, NY; Progressive Financial Services, Inc. in Tempe, AZ; and, The CBE Group, Inc. in Waterloo, IA. Under this new contract, the PCAs have risen to the challenge and produced outstanding results. In February 2009, these five collection agencies collected the highest monthly collection amount on record for the life of the project, and then broke that record in March 2009. In each month, these PCAs collected over $10 million in billable collections. In Fiscal Year 2008, these PCAs also posted the highest amount collected during a fiscal year since the beginning of the project, with a total of nearly $69 million collected.
    
By outsourcing debt collection services to PCAs and improving the contract, based upon experience and collection information, FMS has increased the benefits of the PCA contract and the PCAs have produced amazing results. FMS anticipates that the increase in PCA collections will continue as more federal agencies authorize administrative wage garnishment for their programs. For additional information regarding FMS’s PCA contract, please contact Anita Triantafilledes, Contracting Officer’s Technical Representative (COTR), at (202) 874-7208.

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