Federal Debt Recovery Act of 1985

(Measure passed House, amended, in lieu of H.R. 5541)

Authorizes the Attorney General to make contracts retaining private counsel to furnish legal services in the case of any claim of indebtedness owed the United States. Requires the Attorney General, in making such a contract in any judicial district, to make an effort to make at least four such contracts with attorneys regularly engaged in private practice in such district.

Prohibits the legal fee payable for such services from exceeding the fee typically charged in the area for the collection of claims of indebtedness.

Requires the Attorney General to enter into contracts with law firms owned and controlled by socially and economically disadvantaged individuals.

Permits the head of an executive or legislative agency, subject to the approval of the Attorney General, to refer to a private counsel any claims of indebtedness owed the United States arising out of such agency's activities.

Declares that, for the purposes of the Fair Debt Collection Practices Act, a private counsel performing collection services under this Act shall be considered a debt collector.

Requires the Attorney General to transmit to the Congress an annual report on the activities of the Department of Justice to recover indebtedness owed the United States.

Requires the Attorney General, within 180 days after the enactment of this Act, to transmit to the Congress a report on the actions taken under this Act.

Requires the Attorney General to carry out this Act through a pilot program in at least five and not more than ten judicial districts.

Requires the Attorney General to issue regulations to carry out this Act and to submit such regulations to the Congress at least 60 days before they become effective.

Declares this Act to be effective for a period of three years, beginning on the date on which the regulations become effective.

Requires the Comptroller General to audit the actions taken by the Attorney General under the pilot program to determine: (1) the extent to which there is competition among private counsel to obtain contracts; (2) the reasonableness of the fees provided in such contracts; (3) the efforts of the Attorney General to retain private counsel; and (4) the results of the debt collection efforts. Requires the Comptroller General to report to the Congress on the findings and conclusions resulting from the audit.