Office of Debt Collection Management’s Implementation
of the Collection Litigation Automated Support System

Report No. 01-15
July 3, 2001
Office of the Inspector General

I. CLASS HAS NOT BEEN TIMELY IMPLEMENTED

As of October 1, 2000, DCM was 18 months behind schedule in implementing CLASS and, by its own estimates, had incurred more than $4.6 million in additional costs as a result of the delays. Moreover, DCM management was unable to provide us with a realistic date of when CLASS would be fully implemented. The Department continues to incur additional costs of more than $400,000 for each month that the system is delayed. The primary reasons for the delay are: (1) ongoing disagreements between the DCM office and the Executive Office for United States Attorneys (EOUSA) concerning the ability of the system to meet the needs of EOUSA users, (2) the lack of direction and involvement from Department management towards implementation of the system, and (3) changes in the telecommunications requirements after the contract was awarded. Because of the delays, DCM did not meet the performance goals it established for the project under the Government Performance and Results Act of 1993 (GPRA).

The contract with CACI to implement CLASS was awarded on May 18, 1998, for an amount not to exceed $43.6 million. A total of $4,510,140 was obligated at the time of contract award to implement the first two phases of the contract. The contract required CACI to complete phase I -- implementing CLASS in 7 USAOs and the 18 associated Private Counsel offices -- by November 30, 1998. The contract required CACI to complete phase II -- implementing CLASS in the remaining 87 USAOs -- by March 31, 1999. However, phase I was not completed until May 9, 1999, more than 5 months behind schedule. According to DCM officials, the delay in completing Phase I was primarily due to changes in the telecommunications requirements within the Department after the contract was awarded. Phase II implementation did not begin until November 1999 with the initial efforts to migrate TALON data to CLASS for two judicial districts, about 8 months after the data migration for the remaining 87 USAOs was supposed to be completed. Overall, as of October 1, 2000, implementation of CLASS was 18 months behind schedule and DCM management could not provide us with a realistic date for when CLASS would be fully implemented.

According to estimates prepared by DCM, as of October 1, 2000, the delay in implementing CLASS has cost more than $4.6 million. Of the $4.6 million, about $900,000 was for direct payments to the CLASS contractor for such items as maintaining the use of trainers, computer equipment, and training space during the delay period. The remaining $3.7 million is characterized by DCM as “lost opportunity” costs. Lost opportunity costs represents the estimated costs of staff time that would have been freed up to use on other debt collection activities if CLASS had been implemented on schedule. The estimate also showed that each additional month the system is delayed will cost the Department $403,053. About $29,000 of the monthly delay costs are payments to the CLASS contractor and the remaining amount is for the lost opportunity costs as stated above.

Disagreements between DCM and EOUSA

Although the DCM and CACI are implementing CLASS, the USAOs (under the authority of EOUSA) and the Private Counsel offices are the primary users of the system. EOUSA has expressed reservations about the ability of CLASS to meet the needs of the USAO users and, therefore, is reluctant to replace its TALON system in the remaining 87 USAOs.

During calendar year 1999, DCM and EOUSA held numerous meetings to try and resolve EOUSA’s concerns about CLASS. Numerous exchanges of correspondence between DCM and EOUSA also occurred subsequent to the meetings. While DCM appeared to make progress towards resolving individual issues raised by EOUSA, it did not appear to reduce EOUSA’s reluctance to replace TALON with CLASS. After each exchange of correspondence, EOUSA would often repeat some of its previous concerns, as well as relay additional concerns to DCM. As of January 2001, EOUSA was still insistent that CLASS did not sufficiently meet the needs of the USAO users. However, DCM officials believe they have adequately addressed all of EOUSA’s significant concerns. As discussed in Finding III, we visited the 7 USAOs in which CLASS has been implemented, as well as 12 of the 18 associated Private Counsel offices, to determine if the system was meeting the needs of the users. While the system has shortcomings that DCM is trying to address, based on our interviews of system users, we concluded that the system is meeting most of the users’ critical needs.

Department Direction and Involvement

Since DCM and EOUSA have been working unsuccessfully for more than a year to resolve their disagreements, we discussed with both DCM and EOUSA staff what actions they have taken to raise their disagreements to a higher level so the delay in implementing the system could be resolved. While both DCM and EOUSA informed us that they have kept senior management informed of the progress of CLASS’s implementation, neither provided us with documentation to indicate that Departmental management had made it clear that the system would be deployed nationally. We did obtain documentation showing DCM staff briefed the Assistant Attorney General for Administration (AAG/A) in May 2000. At the briefing, the AAG/A expressed the same concerns we have regarding the untimely implementation of the system. After the disputes between DCM and EOUSA over competing debt collection systems had been unresolved for more than a year, and after we informally communicated our concerns to DCM officials, the AAG/A took action in early December 2000. The AAG/A established a team of independent consultants, referred to as the “Red Team,” to perform a study of the systems in use by the USAOs and Private Counsels and to recommend the system that best meets the Department’s requirements. The Red Team’s report, issued on January 19, 2001, recommended that CLASS be modified and used as the single debt collection system for the Department. After the report was issued, we were informed by DCM officials that the AAG/A and the Director of EOUSA agreed, for the most part, with the recommendations made in the study. However, we have not received documentation to substantiate the statement.

Performance Goals

The GPRA requires federal agencies to develop: (1) a strategic plan that identifies agencies’ long-term goals, and (2) annual performance plans that identify the measurable performance goals that agencies will accomplish each year. We found that while DCM had established performance goals related to the implementation of CLASS, the goals had not been met because of the delays in implementing the system. Based on the results of the Red Team’s evaluation, DCM’s performance goals need to be changed to measure progress of the system through completion.

Recommendations:

We recommend the Assistant Attorney General for Administration:

1. Act quickly to implement the recommendations of the “Red Team” to minimize any further delays in implementing a nationwide debt management system and to minimize the expenditure of additional unnecessary costs.

2. Require the DCM to revise its performance goals based on management actions taken as a result of the “Red Team’s” evaluation, and to implement steps to achieve those goals.

II. PROBLEMS OCCURRED IN MIGRATING DATA, DOCUMENTING TIMELINESS OF DATA INPUT, AND REPORTING DEBTS COLLECTED

We found that, during the initial implementation phase, non-financial data was not accurately migrated from TALON to CLASS in two districts. Upon disclosing the errors to CACI, it took prompt action to correct the data and the program deficiency that caused most of the errors. In addition, we found that timeliness of entering debt-related data into CLASS by the Private Counsel offices could usually not be determined because the offices were not required to, and did not, date stamp incoming documents. We also identified material discrepancies in DCM’s and EOUSA’s reports on debts collected.

Migrating Data from TALON to CLASS

In November 1999, DCM and CACI began the process of migrating data in two USAOs from the TALON system to CLASS. As of March 9, 2000, CACI had migrated the non-financial data from TALON to CLASS for 6,849 debt cases assigned to the two districts. CACI’s efforts in these two USAOs were the first attempts to migrate TALON data to CLASS. We judgmentally selected 20 of the cases and compared the data in CLASS after the migration to the data in TALON. We found errors in the migrated data for 11 of the cases reviewed. The types of errors included: (1) incomplete phone numbers and social security numbers; (2) unsupported numbers in the CLASS database for certain fields; and (3) the inclusion of two TALON criminal cases, which should not have been included in the civil debt database. While our sample was relatively small, the majority of the errors found were systemic in nature as they primarily resulted from programming errors. Specifically, some CLASS data fields allowed fewer characters than the corresponding TALON data fields. Therefore, when the TALON data was migrated to CLASS, the TALON data was truncated to fit into the smaller CLASS data fields, thus rendering the migrated data inaccurate. When we advised CACI of the errors, CACI took prompt actions to correct the errors in the migrated data, as well as to correct the deficiency in the software program used to migrate the data.

Timeliness of Data Entry by Private Counsel Offices

The contract between the Department and the Private Counsel offices requires that users enter judgment dates, interest dates, and complaint dates into the CLASS system as they occur. Private Counsel offices that do not provide timely information are subject to financial sanctions up to and including termination of the contract. We visited 12 of the 18 Private Counsel offices that had implemented CLASS and attempted to determine whether debt-related data was being timely entered into the system. Three of the 12 offices did not have any current CLASS cases to test. Of the remaining nine offices, eight did not record when incoming documents were received. As such, a calculation of the time from document receipt until data input could not be made. For the one office that recorded when incoming documents were received, we tested 50 collection-related documents and found the office entered data late at least 82 percent of the time. The number of days late ranged from 1 to 181, and averaged 64 days. Additionally, staff from several Private Counsel offices stated they usually do not enter all pertinent data into CLASS’s data fields. Specifically, information that precedes the actual judgment date, such as the complaint filed date or the date the complaint was served on the debtor, is not entered. Pre-judgment dates were deemed unimportant by counsel’s staff. However, a DCM official stated that it is important to have these dates in the system in case management of the debts has to be referred to another collection authority.

We advised a senior DCM official of the problem we had determining whether the Private Counsel offices were timely entering data into CLASS. The DCM official stated she considered it important that information be input accurately and timely. The official explained that Private Counsel offices may change and subsequent collectors must have an accurate, up-to-date picture of collection activities. If the Private Counsel offices do not keep the database current, collection efforts may be degraded by the lack of important and timely information.

Reporting Debts Collected

The DCM gathers, compiles, and distributes a report on total debts collected by Department components and collections deposited into the U.S. Treasury. We noted significant differences between the dollar amounts reported as collected and the amounts reported as deposited in the U.S. Treasury for FYs 1998 and 1999. The following table illustrates the differences.

DCM could not explain the differences and stated that they make no effort to resolve differences between the amounts reported as collected and deposited on the report. According to the officials, DCM simply aggregates the collection amounts reported by the various components and prepares summary data for management’s information. The officials further stated that the summary financial data would not affect the accuracy of CLASS when data is migrated from TALON because financial information in each debtor case will be individually reconciled before migration is completed. In our judgment, however, collection data reported to senior Department officials should be reconciled, or confirmed as accurate by other means, before the information is disseminated within and outside the Department.

In our review of summary level data at EOUSA, we also noted reporting discrepancies that should be corrected. As detailed in the following table, the debt balance reported on the last day of FY 1998 did not match the beginning balance reported the next day (the first day of FY 1999.) The same type of discrepancy occurred at the end of FY 1999 and beginning of FY 2000.

We intend to examine these types of discrepancies in more detail in a subsequent audit.

Recommendations:

We recommend the Assistant Attorney General for Administration:

3. Require DCM to institute procedures, such as date stamping of incoming documents, to enable the verification of whether data is being timely entered into CLASS, and ensure the Private Counsel offices input all required data timely.

4. Require DCM to obtain a certification from the USAOs that they have verified the accuracy of the financial data in TALON before allowing the data to be migrated from TALON to CLASS.

III. SOME USERS WERE NOT SATISFIED WITH TWO SYSTEM FEATURES

During our fieldwork, we visited the 7 USAOs and 12 of the 18 Private Counsel offices using the CLASS system and found that users were generally satisfied with most of the system features. However, most of the users were not satisfied with system features related to generating documents and managing “joint/several” liability cases. Users in 17 of 19 offices we visited stated the CLASS system was deficient in producing all required documents. While 7 of the 19 offices did not have joint/several liability debt cases, users in 7 of the remaining 12 offices had reservations about the usefulness of the joint/several liability feature.

Generating Documents

The ability of the debt management system to easily generate documents such as initial demand letters, client agency acknowledgment letters, or payment default letters can greatly simplify a debt manager’s job. While users in the 7 USAOs and 12 Private Counsel offices we visited used and were satisfied with most of CLASS’s features, users in 6 USAOs and 11 Private Counsel offices complained that the document generation feature of CLASS was not user friendly. Users expressed an enormous amount of confusion and dissatisfaction regarding the program’s ability to produce needed documents. Some users stated they did not use CLASS because the program did not meet their office’s document generation needs. Other users indicated that the up-front resources needed to modify the program’s document generation features were too demanding and therefore they chose not to use it. Still other users were concerned about the integrity of the financial data being captured from the database that would be inserted into the system-generated letters. A user in one Private Counsel office stated that her office used the document generation feature exclusively and felt it effectively met their needs. She added, however, that more than a year was needed to modify, test, and gain enough experience with the feature to make it a useable tool in her office.

Joint/Several Liability

Joint/several liability relates to cases where multiple debtors are responsible for the repayment of a single debt. The joint/several liability feature of the system must be capable of: (1) recognizing, recording, and processing a payment by one debtor; and (2) reducing the total balance due from all debtors while not modifying the payment records or payment arrangement of the non-paying debtor(s).

During our fieldwork, we visited 19 offices (7 USAOs and 12 Private Counsel offices) and tested the usefulness of the joint/several liability feature of the system. The DCM had assured us that earlier shortcomings of the system were addressed and that the feature was operational. Seven of the 19 offices had not used the feature because their caseloads did not include joint/several debtor cases. Users in 7 of the remaining 12 offices stated that while the feature worked, they had reservations about the ability of the feature to be useful. Several respondents stated they believed the feature was very cumbersome and prone to display misleading information. Another user said that only users very familiar with the system could adequately use the feature. Synopses of the comments of the seven users with reservations about the joint/several feature of CLASS are as follows.

Office Visited	User Comments Regarding Joint/Several Liability Feature
Southern District of Florida USAO	Works but needs improvement. Not user friendly. System is inefficient and displays debt balances differently when comparing screens within the same case.
Eastern District of New York USAO	Works but needs improvement. Not user friendly. System is inefficient and displays debt balances differently when comparing screens within the same case.
Eastern District of Michigan USAO	Works but is not satisfied. Not user friendly. Must access too many screens to get simple information. System generates multiple statements for each debtor causing the balances to appear inaccurate.
Eastern Michigan Private Counsel #1	Works but technicians must be very familiar with operational aspects of the feature to ensure accurate data is obtained.
Eastern Michigan Private Counsel #2	Works but CLASS uses the same balance for each debtor.
Central District of California USAO	Works but the feature is inefficient. Technicians must enter data for each debtor. Also, technicians are required to modify the primary accounts to close events the system automatically enters.
Central District of California Private Counsel #1	Works but has had only one joint/several case. USAO had to assist in entering data.

Recommendation:

We recommend the Assistant Attorney General for Administration:

5. Require DCM to obtain input from all offices using CLASS about the problems they are having with the document generation and joint/several liability features of CLASS. After receipt and analysis of user input, DCM should take action to ensure these features meet user needs.