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This chapter provides guidance, procedures and forms necessary to process certifications from the Judgment Fund (Fund) for settlement of administrative and litigative claims against the U.S. Government.

Section 3110—Scope and Applicability

Fund certification functions were transferred from the General Accounting Office (GAO) to the Financial Management Service (FMS), Department of the Treasury (Treasury), effective June 30, 1996. This chapter issues guidance on Fund certification under FMS' authority.

Section 3115—Authority

Congress established the Fund, which is a permanent, indefinite appropriation, to pay:

• Certain judicially and administratively ordered monetary awards against the United States.
• Amounts owed under compromise agreements negotiated by the U.S. Department of Justice in settlement of claims arising under actual or imminent litigation.

In general, to qualify for payment from the Fund, awards:

• Must be final.
• Must require payment of specific sums of money awarded against the United States under one of the authorities specified in 31 U.S.C. § 1304(a)(3).
• May not legally be payable from any other source of funds.

FMS certifies judgments and administrative awards as payable from the Fund.

Pursuant to Public Law 104-53 (November 19, 1995), the Fund function was transferred from GAO to the Office of Management and Budget (OMB). The Director, OMB, delegated this responsibility to Treasury, FMS.

Accounting and Financial Reporting Authorities for the Judgment Fund

The Chief Financial Officer (CFO) Act, Public Law 101-576, Nov. 15, 1990, requires the Secretary of the Treasury (Secretary) to prepare, at yearend, auditable financial statements using accounting standards promulgated by OMB and the Financial Accounting Standards Advisory Board. These standards are incorporated by reference.

The Statement of Federal Financial Accounting Standards No. 1 (SFFAS #1), "Accounting for Selected Assets and Liabilities," contains the specific requirements for the accounting, reporting and disclosure of receivables resulting from a Fund payment. For the detailed text of SFFAS #1, see the FinanceNet website at http://www.fasab.gov/pdf/sffas-1.pdf.

The Budget and Accounting Procedures Act of 1950, 31 U.S.C. § 3513a:

• Requires the Secretary of the Treasury to prepare reports on financial operations of the U.S. Government.
• Provides that each executive agency must furnish the Secretary of the Treasury information relating to the agency's financial condition and operations as required.

Section 3120—General Guidance for Certification of Payments

Agency Submission to FMS

Responsible agencies must submit requests for certification of Fund payments per procedures in this chapter (see the Contacts page). For litigative awards, the "responsible agency" is the agency responsible for defending the United States in court. For administrative awards, the "responsible agency" is the agency authorized to settle the claim.

Agency Certifications

The responsible agency must certify the propriety and amount of the award using the forms prescribed in Sections 3125 and 3130.

FMS Forms

See Appendices 1 through 5 for the FMS forms prescribed in this chapter. These forms are not available through standard forms channels, and agencies may photocopy them locally, as necessary. These forms also are available on the Judgment Fund website at http://www.fms.treas.gov/judgefund/ index.html.

Section 3125—Core Submission Requirements for Litigative and Administrative Awards

Agencies must follow these core submission requirements to submit litigative or administrative awards. In addition, agencies also must follow the specific requirements detailed in Section 3130 for each award type. For every award (litigative or administrative), the responsible agency must submit completed copies of the following:

• FMS 194: Judgment Fund Payment Request (Lit. Award) (see Appendix 1) or FMS 195: Judgment Fund Payment Request (Admin. Award) (see Appendix 2).
• FMS 196: Judgment Fund Award Data Sheet (see Appendix 3).
• FMS 197: Voucher for Payment Where a Settlement Agreement Has Not Been Executed and Attached or Where a Final Judgment Is Not Attached, or FMS 197-A: Voucher for Payment Where a Settlement Agreement Has Been Executed and Attached or Where a Final Judgment Is Attached (see Appendix 4).

Agencies may use FMS 198: Judgment Fund Award Data Sheet—Additional Deductions (see Appendix 5) to itemize deductions requested on FMS 196, line 13. They also must meet the following requirements as appropriate to each case.

3125.10—Debts Owed the United States

The responsible agency must submit an agency certification of any known debts owed to the States that are subject to collection by means of setoff against the award under 31 U.S.C. § 3728.

3125.20—Payment on Behalf of Insured Claimant

If an insurance company or some other insurer for a claim has not made payment to or on behalf of the insured claimant (for instance, an unreimbursed deductible amount) before it presents the claim to the U.S. Government, the responsible agency must document the insurer's authority to collect that amount on behalf of the insured claimant.

3125.30—Payment on Behalf of Insurer

If an insurance company or some other insurer has made payment to or on behalf of an insured claimant before the insured presents the claim to the U.S. Government, the responsible agency must document the insured claimant's authority to collect the insured portions of the claim on behalf of the insurer.

3125.40—Minor or Legally Incompetent Claimant

If the claimant is a minor or is otherwise legally incompetent, the responsible agency must establish in the record that the payee is legally authorized to act on behalf of the claimant and that the payee has obtained any required court approvals (Federal, State or foreign).

Section 3130—Additional Submission Requirements Specific to the Type of Award Being Paid (Litigative or Administrative)

The responsible agency also must submit the following documents as appropriate for each case.

3130.10—Bill of Costs

For awards arising from actual or imminent litigation, the responsible agency must submit the court judgment/order(s) or compromise settlement agreement(s), as applicable, in addition to the documents required by Section 3125. If the court awarded costs against the U.S. Government, the responsible agency must include a copy of the "bill of costs" (or some other specific list of the costs awarded) with its submission.

3130.20—Court of Federal Claims Awards

Court of Federal Claims awards must be in accordance with the requirements of 28 U.S.C. § 2517.

The responsible agency must submit:

• A letter requesting payment of the award (see Appendix 1, FMS 194, for an example).
• An FMS 196 with all pertinent information included (Appendix 3).
• An FMS 197 or 197-A (Appendix 4).

The plaintiff or its attorney must submit the original raised-seal transcript of the court's judgment.

Treasury will make the payment precisely as the judgment directs and will send it to wherever the plaintiff directs. However, Treasury may send the payment to the plaintiff's attorney upon the attorney's request and submission to Treasury of a power of attorney. The power of attorney must specifically allow such action or be broad enough to be so interpreted.

3130.30—Awards of Unspecified Backpay Amounts

For awards of backpay when the judgment does not precisely identify the amount to be paid and withholdings to be made, the responsible agency must include a copy of a signed agreement of the parties specifying the amounts to be paid and withholdings to be made.

3130.40—Additional Requirements for Administrative Settlements

For awards arising from administrative settlements, the responsible agency must submit the following in addition to the core requirements detailed in Section 3125:

• For Federal Tort Claims Act awards, submit a copy of Standard Form 95: Claim for Damage, Injury, or Death.
• For board of contract appeals awards, submit a copy of the board's decision and certifications of finality from the board and the contractor/claimant.

Section 3135—Incomplete Submissions

FMS will return, without action, requests for certifications that do not contain all required documents, information or certifications. The agency may resubmit a request for certification to FMS with the documents and information required.

Section 3140—Multiple Claimants/Payees

When multiple payees are to receive separate payments, the responsible agency must submit either:

• Separate forms as described in Sections 3125 and 3130 for each payee;

OR

• Separate vouchers along with some other schedule providing the same information required by the forms described in Sections 3125 and 3130 for each payee.

Examples of this include:

• Payments made to each class member in a class action;
• Separate payments made to each heir in a wrongful death action;

OR

• Payments made to each of several co-plaintiffs in a tort action.

Section 3145—FMS Processing of Payments

3145.10—Advice and Guidance

The Judgment Fund Section will provide advice or information regarding submission, processing time and certification criteria of the Fund. GAO's Principles of Federal Appropriations Law, vol. 3, c. 14 (2d ed. 1994), contains a detailed discussion of the Fund and related provisions of law.

3145.20—Certifications

The Judgment Fund Section will certify for Fund payment those awards that meet Fund criteria. After the award is certified, the Judgment Fund Section transmits an electronic request to a Regional Financial Center (RFC) for check issuance or initiation of an electronic funds transfer, as applicable. The Judgment Fund Section will request that the RFC issue a check or an electronic funds transfer to the payee identified in the judgment or settlement, as reported in FMS 196 (Appendix 3). The RFC will mail all checks to the submitting agency's contact listed on FMS 196. Therefore, the submitting agency must ensure that the correct delivery address is on the FMS 196.

3145.30—Denials

If the Judgment Fund Section declines to certify payment of an award, it will provide the responsible agency with an explanation in writing or verbally.

Section 3150—FMS Processing of Receivables

3150.10—Reimbursement Process

All reimbursements to the Judgment Fund (e.g., Contract Disputes) are expected to be fully collectible from the responsible agency. FMS will make demands for the reimbursement in writing to the debtor agency 15 days from the date of the payment to the claimant. If the responsible agency fails to contact FMS within 30 days of the initial contact letter, FMS will send a followup letter to the responsible agency. If the agency fails to respond within 60 days of the initial contact, FMS will send a letter to the responsible agency's Chief Financial Officer (CFO). The agency's CFO has 30 days to contact FMS. If the agency's CFO or designee fails to contact FMS within the 30-day period, FMS will include the outstanding balance in a semi-annual report to Congress.

After FMS reports the intragovernmental debt to the appropriate office or to Congress, FMS will record the total balance of the intragovernmental debts in an allowance account for past due and potentially uncollectible debts. FMS will consider the total amount of the intragovernmental debt in the allowance account as a loss. The responsible agency should record the amount of its unreimbursed intragovernmental debt as a liability. While FMS will recognize a loss based on the uncollected intragovernmental debt, the responsible agency will remain liable for reimbursement until the appropriate office or Congress provides writeoff authority for the intragovernmental debt.

3150.20—Accounting Requirements

The Interpretation of Federal Financial Accounting Standards, Interpretation No. 2, "Accounting for Treasury Judgment Fund Transactions An Interpretation of SFFAS No. 4 and SFFAS No. 5" requires agencies to recognize liabilities and expenses when unfavorable litigation outcomes are probable and the amount can be estimated. See the FinanceNet website at http://www.fasab.gov/intprt2.htm. After FMS determines the Judgment Fund is the appropriate source of a claim payment, an imputed financing source will be recognized by the agency and the liability will be removed. FMS will record an expense.

The agency will record the following entry at the time it learns the Judgment Fund will be the source of payment for the settlement. The entry records both imputed costs and imputed financing sources as Federal transactions (G for FACTS purposes) and records the Judgment Fund as the trading partner:

Dr. 6730G Imputed Costs (20)
Cr. 5780G Imputed Financing Sources (20)

FMS will record the following entry at the time it determines the Judgment Fund is the appropriate source for the payment. The Judgment Fund will code costs as Federal (G) or Non-federal (N) based upon the identity of the vendor/claimant to whom the moneys will be paid.

Dr. 6100N/G Operating Expenses/ Program Costs
Dr. 3100 Unexpended Appropriations
Cr. 5700 Expended Appropriations
Cr. 1010 Fund Balance with Treasury

The above entries apply for all Judgment Fund transactions, but if the payment falls under the Contract Disputes Act, the agency also will record a payable to FMS and FMS will record a receivable from the agency.

FMS will notify agencies via the Judgment Fund website, www.fms.treas.gov/judgefund, of claims, at the transaction level, that have been approved as appropriate for payment from the Judgment Fund.

3150.30—Financial Statement Accounting and Disclosure Requirements for Judgment Fund Receivables

FMS must report all receivables arising from certification of Fund payments. It reports these receivables on the Balance Sheet of the CFO Financial Statements prescribed in OMB 97-01, "Form and Content of Agency Financial Statements."

FMS will report Fund receivables on its financial statements and include them in the appropriate disclosures. Also, it will record the receivable on all internal reports. Financial statements and internal reports assume that all intragovernmental receivables are fully collectible unless there is definitive proof that the amount is uncollectible.

On the CFO Financial Statement Balance Sheet, FMS reports Fund receivables in the asset section. It classifies these assets as non-entity assets and includes them in the subcategory of intragovernmental receivables.

Each year FMS will provide a schedule of outstanding receivables by year for use in preparing the financial statement footnotes. It also will provide a schedule of receivables considered uncollectible under the criterion in Section 3150. These schedules allow financial statement users to determine the net realizable value of the outstanding intragovernmental receivables. Agencies should ensure that these amounts are consistent with the amounts provided for internal reporting and supported by the core accounting system and documentation.

Supporting documentation for Fund receivables should include:

• The amount certified for payment.
• All management attempts to collect the receivable from the responsible agency, including notifications to Congress.

This documentation should support the amounts recorded in the core accounting system and be available for audit.

Section 3155—Reports of Payments from the Judgment Fund

FMS maintains Judgment Fund data for its internal use only. All necessary reports of payments from the Judgment Fund must be compiled, maintained and issued by the agency out of whose actions the claim arose.

Direct questions concerning this chapter to:

Judgment Fund Staff
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 6D37
Hyattsville, MD 20782
Telephone: 202-874-6664
Judgment Fund website: http://www.fms.treas.gov/judgefund/index.html

Chapter Appendices are only available in Portable Document Format (PDF) at http://fms.treas.gov/judgefund/judforms.pdf

Transmittal Letter No. 595

Volume I

To: Heads of Government Departments, Agencies and Others Concerned

1. Purpose

This transmittal letter releases I TFM 6-3100: Certifying Payments and Recording Corresponding Intragovernmental Receivables in the Federal Government's Judgment Fund. This chapter provides guidance, procedures and forms necessary to process certifications from the Judgment Fund for settlement of administrative and litigative claims against the U.S. Government.

2. Page Changes

Remove
Table of Contents for Volume I
I TFM 6-3100

Insert
Table of Contents for Volume I
I TFM 6-3100

3. Effective Date

Upon receipt.

4. Inquiries

Direct questions concerning this transmittal letter to:

Judgment Fund Section
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 6D37
Hyattsville, MD 20782
Telephone: 202-874-6664

Date: September 28, 2000

Richard L. Gregg
Commissioner