Management of Obligations to the Department
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 which 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 an export application.
| Company Name | Violation | Date Assessed |
Amount Assessed |
Balance Outstanding September 30, 2006 |
Fiscal Year 2007 Assessments |
Fiscal Year 2007 Collections |
Balance Outstanding September 30, 2007 |
|---|---|---|---|---|---|---|---|
| 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 | $5,057,142 | $— | $1,685,714 | $3,371,428 |
| 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 spacecraft) to the People's Republic of China. | 3/4/2003 | 12,000,000 | 1,500,000 | — | — | 1,500,000 |
| 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 license and exporting defense services without munitions license or other authorizations. | 11/24/2003 | 1,750,000 | — | — | — | — |
| ITT CORPORATION | Exporting defense articles and services (night vision products and space remote sensing technical data and defense services) in violation of the terms or conditions of other approvals that were provided by the Department. | 11/1/2004 | 3,000,000 | 1,000,000 | — | 1,000,000 | — |
| GENERAL MOTORS CORPORATION | Exporting defense articles and services (to foreign person employees of proscribed countries) in violation of the terms or conditions of other approvals that were provided by the Department. | 11/1/2004 | 8,000,000 | 4,500,000 | — | 1,500,000 | 3,000,000 |
| ORBIT ADVANCED TECHNOLOGIES INC. |
Violating the terms and conditions of the Department's munitions and licenses by agreeing to sell defense articles (Radome Measurement System - AL8098/AL8099) to the People's Republic of China | 08/29/05 | 500,000 | 233,333 | — | 66,667 | 166,666 |
| THE BOEING COMPANY |
Exporting unauthorized defense articles and services (to foreign person employees of proscribed countries) in violation of the terms and conditions of the Department's International Traffic in Arms Regulations (ITAR). | 03/28/06 | 15,000,000 | — | — | — | — |
| GOODRICH CORPORATION |
Exporting unauthorized defense articles and services (to foreign person employees of proscribed countries) in violation of the terms and conditions of the Department's International Traffic in Arms Regulations (ITAR). | 03/28/06 | 1,250,000 | 750,000 | — | 250,000 | 500,000 |
| L-3 COMMUNICATIONS | Exporting unauthorized defense articles and services (to foreign person employees of proscribed countries) in violation of the terms and conditions of the Department's International Traffic in Arms Regulations (ITAR). | 02/28/06 | 2,000,000 | 1,500,000 | — | 1,500,000 | — |
| THE DIRECTTV GROUP INC. & HUGHES NETWORK SYSTEMS INC. | Exporting unauthorized defense articles and services (to foreign person employees of proscribed countries) in violation of the terms and conditions of the Department's International Traffic in Arms Regulations (ITAR). | 1/26/2005 | 5,000,000 | — | 5,000,000 | 3,500,000 | 1,500,000 |
| LOCKHEED MARTIN (SIPPICAN) CORPORATION | Exporting unauthorized classified and unclassified technical data and defense articles and services in violation of the terms and conditions of the Department's International Traffic in Arms Regulations (ITAR). | 12/12/06 | 3,000,000 | — | 3,000,000 | 1,000,000 | 2,000,000 |
| SECURITY ASSISTANCE INTERNATIONAL, INC. & HENERY L. LAVERY III | Violating the terms and conditions of the Department's munitions licenses and exporting defense services without munitions licenses or other authorizations to the People's Republic of China. | 12/12/2006 | 75,000 | — | 75,000 | — | 75,000 |
| TOTAL | $65,575,000 | $14,540,475 | $8,075,000 | $10,502,381 | $12,113,094 |
DEBT MANAGEMENT
Outstanding debt from non-federal sources (net of allowance) decreased from $34.3 million in 2006 to $32.5 million in 2007.
Non-federal receivables consist of debts owed to the International Boundary and Water Commission, Civil Monetary Fund, and amounts owed for Repatriation Loans, medical costs, travel advances, and other miscellaneous receivables.
Of the delinquent receivables over 365 days old, the majority ($5.6 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 collections of delinquent receivables. In accordance with the agreement and the Debt Collection Improvement Act of 1996 (Public Law 104-134), the Department referred $1,444,897 to Treasury for cross-servicing in 2007. Of the current and past debts referred to Treasury, $385,867 was collected in 2007.
| FY 2007 | FY 2006 | FY 2005 | FY 2004 | |
|---|---|---|---|---|
| Number of Accounts | 884 | 1,044 | 772 | 253 |
| Amounts Referred (In Thousands) | $1,445 |
$1,673 |
$401 |
$261 |
