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Keystone Offset Program

 

What is the Keystone Offset Program (KOP)?

KOP is a Governor's Office initiative aimed at collecting delinquent non-tax debt owed to the commonwealth.  This is done by using existing processes to offset delinquent debt against payments in the SAP enterprise resource planning system (SAP).
 

how does Kop work?

Leveraging existing tools in the current Contractor Responsibility Program (CRP) System, the taxpayer identification numbers (TINs) of customers with eligible delinquent debt in SAP will be identified.  SAP will check this TIN data against the TIN data of vendors scheduled to receive payment from the commonwealth.  If the TINs match, that payment is blocked for further research and possible offset.  Payments to vendors who do not match will be sent to Treasury for payment.
 

What makes a debt "KOP eligible?"

A debt is eligible for KOP if it:
 
  • Is 90 or more days past due;
  • Has a dunning level of 1-4; and
  • Has been certified as valid by the receiving agency.


What is the benefit to commonwealth organizations?

The KOP program provides a passive debt collection mechanism for accounts receivable administered in SAP.  The offset receivable will be applied in SAP just as if the customer made the payment.  A second benefit is that unlike a third party collection contractor, no collection costs will be charged to the organization - the full amount of the offset will be credited to the organization owed.  Another anticipated benefit is the reduction of write-offs performed by the commonwealth.  Fees paid to third party debt collectors and the write-off of uncollected receivables result in lost revenue to commonwealth organizations.
 

Why are TINs important?

Without TINs, there is no way to link vendor payments and customer debts.  Without this link, SAP is unable to block outgoing payments for further investigation.

What is expected of the paying agency?

When a payment is blocked by KOP, an email will be sent notifying the invoice processor of the block, just as is done with CRP blocks.  The invoice processor should obtain the information about the obligation and provide the information to the vendor.  Directions on how to accomplish this are available on the CRP system website.  Agency staff should also provide any requested information about the payment to Comptroller Operations should an offset be pursued.

What is expected of the receiving agency?

First, customer records should contain TIN information.  Management Directive 215.9, Section 6.h.(5) states that agencies shall "ensure that all liabilities owed to the commonwealth are collected to the extent practicable through the offset process."  The inclusion of TIN data in customer records is essential to KOP and should be collected to the extent practicable.  It is also important that receivables in SAP be dunned properly in accordance with policy.  Receivables in SAP should also be maintained accurately.
When an opportunity to offset presents itself, the receiving agency will be asked to certify that the debt is accurate.  Comptroller Operation does not wish to put an undue burden on our business partners and want to be sure a debt is valid before offsetting any payment.
 

How is a debt certified?

A debt is certified when the receiving agency informs Comptroller Operations that:
 
  • The amount of the debt is accurate;
  • The customer has been dunned for this debt; and
  • The customer has been notified of the commonwealth's intent to offset.
 
When a certification is needed, the agency will receive an email from Comptroller Operations asking the agency to certify the debt.  

What is dunning and what does it have to do with KOP?

Dunning is the notification to a customer that they are delinquent on an obligation to the commonwealth.  Dunning intervals vary by organization, but are typically at a 30/60/90/120 day cycle.  A dunning level of 1-4 is required for KOP.  A manual block can be used to prevent dunning, but should only be used when warranted.  Dunning levels exist for debt that is in litigation or has been referred to the Office of Attorney General for collection.  It is important that receivables are dunned properly so that payments are not made to vendors with delinquent debt or payments to vendors are not incorrectly blocked.  
 

How will this affect procurement?

KOP will have little impact on procurement.  There will be a "soft stop" if a KOP obligation exists.  It is strongly recommended that the purchaser notify the vendor that an outstanding obligation exists; however, this will not prevent the organization from proceeding with the procurement.  This will be handled similarly to a performance issue in CRP system.
 

Can my organization participate in this program if our accounts receivable are not in SAP?

Yes, any organization with non-tax accounts receivables administered outside SAP can participate.  There are two options.  The administration of the receivables can be moved into SAP or the organization can provide a file to be used by the CRP system to match against payment data.  Please contact Comptroller Operations for additional details.
 

Will training be available for commonwealth staff?

Since much of this program leverages existing processes, training classes are not required at this time.  Many resources, including step-by-step guidelines are available and Comptroller Operations' staff are also available to assist and answer questions.  If you have any questions or require additional assistance, please contact the Office of Comptroller Operations, Bureau of Quality Assurance at 717.425.6830.