BOP Program Statement 2013.04 § 8

Compromise of claim is a method of satisfying current or former employee debt by accepting

less than the full amount of the debt for repayment. A request for compromise of claim or

waiver per the Master Agreement can be made in cases involving employment-related debt;

specifically, for overpayments or erroneous payments of salary, benefits, and travel.

a. Criteria. A compromise may be considered when one or more of the following criteria

apply:

■ The debtor is unable to pay the debt within a reasonable time period.

■ The debtor refuses to pay the full amount and the agency is unable to enforce collection (e.g.,

unable to prove the case in court or dispute with debtor over the amount of the debt).

■ The cost of collection does not justify enforced collection of the full amount.

In cases involving overpayments to employees of salary and travel, the Debt Management

Officer shall consider whether equity and good conscience counsel in favor of compromise of the

claim.

In making such determinations, the Debt Management Officer may consider, but is not bound by,

the opinions of the Comptroller General of the United States interpreting 5 U.S.C. 5584.

b. Redelegation of Authority. Redelegation of authority to compromise a claim has been

transferred to the Director, Bureau of Prisons, by Department of Justice Order 2120.4F,

paragraph 5.c. The Director can compromise claims of up to $100,000 (31 U.S.C. 3711(a)(2)).

The Director has further redelegated this authority to the Assistant Director for Administration.

c. Request for Compromise of Claim. A Request for Compromise of Claim (Form DOJ-127,

https://www.justice.gov/sites/default/files/oarm/pages/attachments/2015/04/21/doj_form_127.pdf)

may be initiated by the employee against whom the claim was made or any person having a direct

interest in the compromise.

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The Request for Compromise of Claim shall be submitted to the employee’s CEO. The CEO

shall request an investigation be conducted by the appropriate office (i.e., Financial Management

for travel-related debts and the Human Resource Management Office for salary-related debts) to

determine the nature of the overpayment. The investigative report should provide when, why,

and how the overpayment occurred and whether or not the circumstances satisfy any of the

standards for compromise, as outlined in this subsection.

In addition, consideration shall be given as to whether or not the employee knew or should have

known of the overpayment at the time it occurred and promptly reported it.

If the CEO recommends approval of the Request for Compromise of Claim, the request should

be forwarded, with the investigative report, all supporting documentation, a computation of the

amount requested to be compromised, and an explanation, to the Debt Management Officer

through the Regional Director. For claims originating in the Central Office, the Request for

Compromise of Claim, the investigative report, all supporting documentation, a computation of

the amount requested to be compromised, and an explanation shall be routed through the

appropriate Assistant Director to the Debt Management Officer for disposition. If the Debt

Management Officer concurs with the recommendation to approve the compromise of claim, the

Debt Management Officer forwards the compromise of claim to the Assistant Director for

Administration, recommending that the request be approved. If the Debt Management Officer

does not approve the compromise of claim, the request is returned to the Regional Director (or

Assistant Director, as appropriate) with an explanation of the denial.

If the CEO (or Assistant Director, as appropriate) does not recommend approval of the Request

for Compromise of Claim, the request shall be returned to the originator explaining why the

claim was denied via BOP Internal Email System. If the CEO recommends approval of the

claim, but the Regional Director does not, the Regional Director returns the request to the CEO

and the originator with an explanation as to why the claim was denied via BOP Internal Email

System. In each case, a copy of the explanation, the Request for Compromise of Claim, and the

investigative report are forwarded to the Debt Management Officer.

The employee has the right to appeal any denied claim to the Debt Management Officer. The

Employee shall request the appeal with a cover memorandum and include all relevant

documentation. The appeal must be submitted no later than 30 days from date of receiving the

denial.

There are a few instances in which the amount compromised is to be reported to the Internal

Revenue Service (IRS). The Debt Management Officer is responsible for determining if the

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amount compromised meets the criteria for IRS reporting. If it does, Accounting Operations

shall make the report and address the requirement in the approval letter.