Management of Obligations to the Department
Outstanding debt from non-Federal sources (net of allowances) increased from $21.3 million in 2003 to $55.9 million in 2004. Refer to Notes to the Principal Financial Statements, Note 6, for an analysis of Accounts Receivable balances. Non-Federal receivables consist of debts owed to the International Boundary and Water Commission, and amounts owed for Repatriation Loans, medical costs, travel advances, proceeds from the sale of real property, and other miscellaneous receivables.
Of the delinquent receivables over 365 days old, the majority ($5.2 million) is for the Repatriation Loan Program. These are loans given to destitute American citizens stranded overseas to allow them to return to the United States. The loans are given only if the individual cannot obtain funds from relatives, friends, employers, or another source. The Department acts as the lender of last resort. The loan becomes delinquent 60 days after repatriation to the United States. Due to their poor economic situation, most of these individuals are unable to repay the loans on time.
The Department uses installment agreements, salary offset, and restrictions on passports as tools to collect its receivables. It also receives collections through its cross-servicing agreement with the Department of the Treasury. In 1998, the Department entered into a cross-servicing agreement with the Department of the Treasury for collection of delinquent receivables. In accordance with the agreement and the Debt Collection Improvement Act of 1996 (Public Law 104-134), the Department referred $261,322 to Treasury for cross-servicing in 2004. The 2002 first quarter anthrax related U.S. mail disruptions affected the Department's ability to receive payments and to provide debtors proper due process notification. Thus, the Department was unable to refer debts to Treasury for most of 2002. Of the current and past debts referred to Treasury, $176,120 was collected in 2004.
|FY 2004||FY 2003||FY 2002|
|Number of Accounts||253||927||177|
|Amounts Referred (In Thousands)||$261
FEDERAL CIVIL PENALTIES INFLATION ADJUSTMENT ACT
The Federal Civil Penalties Inflation Adjustment Act of 1990 established annual reporting requirements for civil monetary penalties assessed and collected by Federal agencies. Civil penalties are defined as any non-criminal penalty, fine or other sanction for which a given dollar amount or maximum amount is specified by Federal law, and that is assessed or enforced by an agency as a result of an administrative proceeding or civil action in the Federal courts. The Department has assessed fines on individuals and companies for exporting defense materials without required approvals and for misrepresenting facts on export applications.
|Balance Outstanding September 30, 2003||Fiscal Year
September 30, 2004
|LOCKHEED MARTIN CORPORATION||Exporting defense articles and defense services in violation of the terms or conditions of other approvals that were provided by the Department, making proposals for the transfer of defense services, and by omitting material facts from export license applications||6/13/2000||$8,000,000||$1,500,000 for four years and $2,000,000 due in year five||$2,000,000||—||$2,000,000||—|
|BOEING COMPANY||Violating the items and conditions of the Department's munitions licenses, exporting defense articles and services without a munitions license and omitting material facts from its applications for munitions licenses||3/30/2001||$3,800,000||$1,000,000 for three years and $800,000 in year four||$800,000||—||$800,000||—|
|SPACE SYSTEMS/LORAL, INC.||Violating the express terms and conditions of the Department's munitions licenses and exporting defense services without a munitions license or other authorization to the People's Republic of China||1/9/2002||$14,000,000||$2,200,000 initially, then
seven subsequent years
(Chapter 11 Bankruptcy granted January 2004)
|HUGHES ELECTRONICS CORP. & BOEING SATELLITE SYSTEMS||Violating the terms and conditions of the Department's munitions licenses and exporting defense services without munitions licenses or other authorizations (and conduct relating to two failed launches of rockets carrying spacecrafts) to the People's Republic of China||3/4/2003||$12,000,000||$1,500,000 for
|MULTIGEN-PARADIGM, INC.||Exporting defense articles and services (software) without munitions licenses or other authorizations to the People's Republic of China, India, Israel, Singapore, Australia, South Korea, Taiwan, France, Japan, Canada, Czech Republic, Italy, Spain, United Kingdom, Sweden and Peru||9/25/2003||$250,000||—||$250,000||—||$250,000||—|
|EDO Corporation||Violations incurred by Condor Systems, Inc. prior to the acquisition of business assets by EDO that included the terms and conditions of the Department's munitions licenses and exporting defense services without munitions licenses or other authorizations||
$583,334 initially, then $583,333 for two years