FAR 32.610—Compromising debts.
Plain-English Summary
FAR 32.610 addresses who has authority to compromise a debt owed to the Government and under what limits that authority may be exercised. It covers debts under $100,000, excluding interest, the role of the designated agency official, the requirement to follow the Federal Claims Collection Standards at 31 CFR part 902, and the effect of agency-specific regulations and procedures. The section also makes clear that contracting officers do not have inherent authority to compromise debts unless agency procedures specifically authorize them to do so. In practice, this provision is a control on debt-collection decisions: it prevents unauthorized settlement of Government claims, ensures consistency with governmentwide debt-collection rules, and channels compromise decisions to officials with the proper delegated authority. For contractors, it signals that debt disputes or settlement discussions must be handled with the correct agency official, not assumed to be within the contracting officer’s power.
Key Rules
Debt threshold applies
The compromise authority in this section applies only to debts under $100,000, excluding interest. Amounts at or above that threshold are outside this provision and must be handled under other applicable authority.
Designated official may compromise
A designated agency official may compromise the debt, meaning reduce, settle, or otherwise resolve the Government’s claim, but only within the limits of the delegated authority.
Follow debt-collection standards
Any compromise must comply with the Federal Claims Collection Standards in 31 CFR part 902 and with agency regulations. Those rules govern when compromise is appropriate and what procedures must be followed.
No default CO authority
Contracting officers cannot compromise debts unless agency procedures specifically authorize them to do so. The section therefore limits contracting officer authority rather than granting it.
Agency procedures control delegation
Even where compromise is allowed, the agency must have procedures that identify who may act and how the decision is documented and approved. Internal delegation and process requirements are essential to valid action.
Responsibilities
Designated Agency Official
Evaluate whether a debt under $100,000 should be compromised and ensure the action complies with 31 CFR part 902 and agency regulations. The official must act only within delegated authority and follow required procedures.
Contracting Officer
Do not compromise debts unless agency procedures expressly authorize that role. If a debt issue arises, refer it to the proper designated official or follow agency debt-collection procedures.
Agency
Establish regulations and procedures that implement the compromise authority, designate the proper officials, and ensure compliance with the Federal Claims Collection Standards.
Contractor/Debtor
Direct debt compromise requests or discussions to the authorized agency official and provide any information needed for the agency to evaluate the debt under applicable standards.
Practical Implications
This section is mainly about authority, not negotiation: a contracting officer may discuss a debt issue, but cannot settle it unless the agency has specifically delegated that power.
The $100,000 limit is based on the debt amount excluding interest, so agencies must calculate the principal carefully before deciding who may act.
A compromise made by someone without proper authority can be invalid or subject to challenge, so documentation of delegation matters.
Contractors should not assume the CO can waive or reduce a debt; they should confirm which office handles debt compromise and collection.
Agencies need clear internal procedures to avoid inconsistent decisions and to ensure compliance with the Federal Claims Collection Standards.
Official Regulatory Text
For debts under $100,000, excluding interest, the designated agency official may compromise the debt pursuant to the Federal Claims Collection Standards ( 31 CFR part 902 ) and agency regulations. Unless specifically authorized by agency procedures, contracting officers cannot compromise debts.