Contract Management: Fixing DOD's Payment Problems Is Imperative (Letter
Report, 04/10/97, GAO/NSIAD-97-37).
Pursuant to a congressional request, GAO reviewed the Department of
Defense's (DOD) efforts to improve its contract payment practices,
focusing on: (1) the factors contributing to payment errors and
increased costs; (2) DOD's efforts to improve its payment system; and
(3) payment practices of commercial companies that DOD might adopt.
GAO noted that: (1) it is imperative that DOD achieve cost-effective
control over its payment process; (2) otherwise, it continues to risk
hundreds of millions of dollars in potential overpayments and other
financial management and accounting control problems; (3) further,
improving the efficiency of the payment process would save additional
millions of dollars annually in reduced processing costs; (4) the
following factors contribute significantly to problems and increased
costs in DOD's payment process: (a) nonintegrated computer systems that
require manual entry of data that is erroneous or incomplete; (b)
multiple documents that must be matched before contractors are paid; and
(c) payments that require allocation among numerous accounting
categories; (5) improving DOD's payment system will not be an easy or
quick undertaking; (6) it will require continued top management
attention and support for many years to come; (7) while DOD is taking
some steps to address its payment problems, when and to what degree they
will effectively correct its problems remains to be seen; (8) further,
DOD's actions do not go far enough in addressing the factors GAO
identified as contributing to payment problems; (9) for example, DOD has
yet to decide on how to minimize transferring existing erroneous data to
the new automated system; (10) moreover, it also plans to continue to
match multiple documents and allocate payments across numerous
accounting categories; (11) GAO's review indicated that DOD might
benefit from further examining best practices of commercial
organizations that have reengineered their contract payments process;
(12) the organizations GAO visited have focused on a long-term effort of
continual improvements with contract payments viewed as an integral part
of the acquisition process; and (13) in general, these organizations
have combined technological improvements with streamlined processes to
improve service and reduce costs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-97-37
TITLE: Contract Management: Fixing DOD's Payment Problems Is
Imperative
DATE: 04/10/97
SUBJECT: Financial management
Contractor payments
Overpayments
Department of Defense contractors
Federal agency accounting systems
Accounting errors
ADP
Defense cost control
Data integrity
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Cover
================================================================ COVER
Report to Congressional Requesters
April 1997
CONTRACT MANAGEMENT - FIXING DOD'S
PAYMENT PROBLEMS IS IMPERATIVE
GAO/NSIAD-97-37
Contract Management
(705124)
Abbreviations
=============================================================== ABBREV
ACRN - accounting classification reference number
DCMC - Defense Contract Management Command
DFAS - Defense Finance and Accounting Service
DOD - Department of Defense
EDI - electronic data interchange
FTE - full-time employee equivalent
MOCAS - Mechanization of Contract Administrative Services
NAVAIR - Naval Air Systems Command
Letter
=============================================================== LETTER
B-272540
April 10, 1997
The Honorable John Glenn
Ranking Minority Member
Committee on Governmental Affairs
United States Senate
The Honorable Tom Harkin
United States Senate
The Honorable Peter A. DeFazio
The Honorable Carolyn B. Maloney
House of Representatives
In response to your request, we reviewed the Department of Defense's
(DOD) efforts to improve its contract payment practices.
Specifically, we looked at (1) the factors contributing to payment
errors and increased costs, (2) DOD's efforts to improve its payment
system, and (3) payment practices of commercial companies that DOD
might adopt. This report focuses on the payment of contracts
administered by the Defense Contract Management Command (DCMC) and
paid by the Defense Finance and Accounting Service's (DFAS) Columbus
Center. As part of our effort to identify innovative practices that
might be applicable to DOD's contract payment process, we
concentrated on those of four non-federal entities--Electronic Data
Systems, Boeing, ITT Automotive, and the University of California,
Berkeley.
In recent years, we have reported on DOD's numerous problems in
making accurate payments to defense contractors. These reports
identify millions of dollars in government overpayments,
underpayments, and interest on late payments, in addition to other
financial management problems. For example, during a 6-month period
in fiscal year 1993, the Center processed $751 million in checks
returned by defense contractors. Our examination of $392 million of
the $751 million disclosed that about $305 million, or about 78
percent, represented overpayments by the government. Subsequently,
we found that some contractors had retained overpayments. For
example, in one case, a contractor was overpaid $7.5 million due to
numerous errors. The overpayment remained outstanding for 8 years.
We estimate that government interest lost on the overpayment amounted
to nearly $5 million. We concluded that neither DOD nor the
responsible contractors appeared to be aggressively pursuing
resolution of payment discrepancies.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
It is imperative that DOD achieve cost-effective control over its
payment process. Otherwise, it continues to risk hundreds of
millions of dollars in potential overpayments and other financial
management and accounting control problems. Further, improving the
efficiency of the payment process would save additional millions of
dollars annually in reduced processing costs.
The following factors contribute significantly to problems and
increased costs in DOD's payment process: (1) nonintegrated computer
systems that require manual entry of data that is erroneous or
incomplete, (2) multiple documents that must be matched before
contractors are paid, and (3) payments that require allocation among
numerous accounting categories.
Improving DOD's payment system will not be an easy or quick
undertaking. It will require continued top management attention and
support for many years to come. While DOD is taking some steps to
address its payment problems, when and to what degree they will
effectively correct its problems remains to be seen. Further, DOD's
actions do not go far enough in addressing the factors we identified
as contributing to payment problems. For example, DOD has yet to
decide on how to minimize transferring existing erroneous data to the
new automated system. Moreover, it also plans to continue to match
multiple documents and allocate payments across numerous accounting
categories.
Our review indicated that DOD might benefit from further examining
best practices of commercial organizations that have reengineered
their contract payments process. The organizations we visited have
focused on a long-term effort of continual improvements with contract
payments viewed as an integral part of the acquisition process. In
general, these organizations have combined technological improvements
with streamlined processes to improve service and reduce costs.
In light of our findings to date we are making recommendations to
enhance DOD's strategy for addressing its contract payment problems.
BACKGROUND
------------------------------------------------------------ Letter :2
Contracting officers typically delegate to DCMC responsibility for
administering contracts when they require delivery or supply of
centrally managed military- or agency-unique items or services. Such
contracts can range in size from small purchases (under $25,000),
which are typically completed within a few months, to multibillion
dollar weapon systems development and production contracts that take
years to complete.
In January 1991, DOD established DFAS to assume responsibility for
DOD finance and accounting. DFAS' Columbus Center pays contracts
administered by DCMC. For fiscal year 1995, these contract payments
amounted to 37 percent of the dollars, and 5 percent of the invoices
paid by DOD. The Center's computer system contained contract
administration and financial data on about 376,000 contracts as of
September 1995. The financial data in the Center's payment system is
not, however, the official accounting record for the contracts.
Rather, approximately 190 accounting stations maintain the official
accounting records. The Center had
1,440 employees, who processed 1.2 million invoices and disbursed
$61 billion in fiscal year 1995.
The Center makes two basic types of contract payments--delivery
payments and financing payments. About two-thirds of all payments
are delivery payments for goods and services; the balance is
financing payments. Financing payments are made on both cost
reimbursement and fixed-price contracts as contractors incur costs
and submit billings. Financing payments on fixed-priced
contracts--called progress payments--are later credited against
delivery payments when items are delivered, a process called progress
payment liquidation. The type of payment made will affect how the
transaction is processed.
DOD recognizes it has serious, long-standing problems in correctly
disbursing billions of dollars in payments and providing reliable
accounting information. DOD identified this as a high-risk area in
its February 1996 Federal Managers' Financial Integrity Act report.
We have also identified DOD contract management, including contract
payments, as a high-risk area.\1
--------------------
\1 High Risk Series: Defense Contract Management (GAO/HR-97-4, Feb.
1997).
FACTORS CONTRIBUTING TO
CONTRACT PAYMENT PROCESS ERRORS
AND COST
------------------------------------------------------------ Letter :3
We identified three key factors that contribute significantly to
problems in DOD's payment process. These three factors are:
-- nonintegrated computer systems that require data to be entered
manually and often with information that is erroneous or
incomplete,
-- multiple documents that must be matched before contractors are
paid, and
-- payment information that is allocated among numerous accounting
categories.
Although there may be other factors contributing to DOD's payment
problems, such as the complexity of contracting requirements for
major weapon systems, our review indicated that addressing the three
factors is key to DOD's ability to improve payment accuracy and
reduce costs.
These factors increase costs by increasing manual data input, invoice
research, contract reconciliation, and manual payment processing.
Figure 1 illustrates that a large portion of the Columbus Center's
reported invoice processing cost are consumed by these functions.
For fiscal year 1995, the Center reported that it cost an average of
$87 to process a contract invoice, $44 of which was direct labor.\2
Figure 1: Activity Cost
Analysis by Contract Payment
Function
(See figure in printed
edition.)
Source: Based on DFAS Columbus Center MOCAS BPR Assessment, KPMG
Peat Marwick, LLP, August 1995.
--------------------
\2 We did not verify or validate the accuracy of the Center's
reported data. However, in February 1996, DOD acknowledged that
accurate and complete cost accounting information is a serious
DOD-wide weakness.
NONINTEGRATED COMPUTER
SYSTEMS OFTEN REQUIRE MANUAL
DATA ENTRY
---------------------------------------------------------- Letter :3.1
Manual entry of contract data into the payment system adds
significantly to processing costs. Generally, other DOD activities,
such as purchasing and accounting, provide most of the data to DFAS
(see fig. 2). However, because DOD's payment system is not
integrated with DOD's procurement and accounting systems, much of the
data they generate cannot be electronically transferred to the
payment system and must be manually entered from hard copy
documents.\3 Even when data is electronically transmitted, it often
is incomplete or inaccurate. Furthermore, because of a perceived
high error rate of electronic transmissions, many DFAS data clerks
enter data manually, according to DOD.
Figure 2: Payment Process
Information Flow
(See figure in printed
edition.)
Source: GAO.
Because the systems are not integrated, the payment process is highly
paper dependent. According to a file room supervisor at the Columbus
Center, the Center files about 25,000 loose contract documents a
week. A consulting firm's study noted that the Center's paper
dependent workflow has frequently led to misrouted and misplaced
paper documents.\4 This condition delays payments and further
increases processing costs. According to DOD, it made a decision in
1995 to implement the government and industry standard for electronic
transmissions to eliminate the manual data entry of contract data
into its accounting and payment systems. The Center is testing the
use of these transmissions in some of its divisions. However, manual
entry may still be required in certain situations, such as contracts
with special clauses.
--------------------
\3 According to DOD, several of the major procurement offices do not
have the capability to make electronic transmissions.
\4 DFAS Columbus Center MOCAS BPR Assessment, KPMG Peat Marwick, LLP,
August 1995.
THE DOCUMENT MATCHING
PROCESS CONSUMES TIME AND
RESOURCES
---------------------------------------------------------- Letter :3.2
Before making payments, Columbus Center employees match a number of
documents to ensure the payments are in accordance with the purchase
order and that funds are available to cover payments. For both
delivery and finance payments, Center employees match at least the
purchase order, the invoice, and the obligation records contained in
the Center's payment system.\5 For delivery payments, they also match
to the receiving document. Although time consuming, matching is
intended to ensure that items ordered were received and that funds
have been obligated and are available to make the payment.
According to DOD officials, the matching to obligation records is
performed to avoid violating the Anti-Deficiency Act.\6 Among other
things, that act provides that a government employee may not make an
expenditure (payment) exceeding the amount in an appropriation or
fund available for that purpose. When a contract is signed, an
obligation is recorded, which essentially reserves sufficient
appropriated funds until payments become due. Center employees match
an invoice to contract obligations recorded in the Center's payment
system to verify the availability of funds before making a payment.
The obligation records used by Center employees, however, are not
DOD's official accounting records. For payments over $5 million, the
Center is also required to verify funding availability in the
official accounting records maintained at the accounting stations.\7
The Center tries to pay invoices automatically, and it did so for
about half of its payments in fiscal year 1995. However, if Center
employees are unable to verify or match payment data to its records
(invoices, purchase orders, receiving documents, Center obligation
records, or accounting station records), they are required to
research discrepancies before making payment. An inability to match
payment data causes Center employees to manually process payments,
which can cost up to seven times more than an automated payment.
Mismatches can also cause the Center to have to reconcile a
contract--an extensive and costly process that can take from several
hours to years. For example, on a contract valued at $1.2 billion,
the Center's and the accounting station's disbursement records
differed by $12 million. In addition, both the Center's and the
accounting station's records differed from the contractor's records.
The Center and a public accounting firm engaged by the Center have
spent about 5 years off and on attempting to reconcile this contract.
While the costs for reconciling this contract were not available, DOD
paid the public accounting firm about $8.6 million in fiscal year
1996 for contract reconciliation support on numerous contracts.
Efforts to resolve mismatches through invoice research, contract
reconciliation, and manual processing account for about 57 percent of
average payment costs. About one-third of the Center's contract
payment personnel are dedicated to invoice research and contract
reconciliation.
--------------------
\5 An obligation is a binding commitment that will require an
expenditure at some later time from an appropriation.
\6 31 U.S.C. 1341.
\7 Section 8137 of Public Law 103-335, Department of Defense
Appropriations Act, 1995.
PAYMENT ALLOCATIONS CAN BE
INACCURATE, MISLEADING, AND
OF QUESTIONABLE VALUE
---------------------------------------------------------- Letter :3.3
DOD uses a "long line of accounting" to accumulate appropriation,
budget, and management information for contract payments. For all
contracts, the buying activity assigns a two-character code called an
accounting classification reference number (ACRN) to each accounting
line containing unique information. The Center allocates payments to
ACRNs in an attempt to ensure that the payments comply with the
requirements of the Anti-Deficiency Act. Figure 3 is an example of
an accounting line--the type and quantity of information varies among
the services.
Figure 3: Example of DOD's
Long Line of Accounting
(See figure in printed
edition.)
Source: DOD.
Contracts can be assigned anywhere from 1 to over 1,000 ACRNs. A
contract with numerous ACRNs may involve extensive data entry,
increasing the chance for errors and manual payment processing.
Manual payment processing costs an average of $15 per ACRN, according
to a consulting firm's study.
According to a DFAS official, contracts with 10 or more ACRNs are
more likely to have payment problems. Our review showed that of the
217,000 active contracts, about 3 percent have 10 or more ACRNs, but
they account for 77 percent of the total value, as shown in table 1.
Table 1
Number of ACRNs Per Contract
(Dollars in billions)
Number Percen Value
of t of of Percen
contra contra contra t of
Number of ACRNs cts cts cts value
-------------------------------------- ------ ------ ------ ------
1 174,08 80 $29.7 5
7
2 to 9 35,846 17 116.4 18
10 to 100 6,523 3 327.4 51
101 to 1,000 448 * 164.1 26
more than 1,000 4 * 0.9 0
======================================================================
Total 216,90 100 $638.5 100
8
----------------------------------------------------------------------
* Less than 1 percent.
Source: GAO analysis of "active" contracts from DOD's Mechanization
of Contract Administrative Services (MOCAS) system, March-April 1996.
When buying activities assign numerous ACRNs, payment allocations to
the ACRNs can be time consuming and may not provide useful or
reliable management information. For example, in one case we
reviewed, a single payment on a contract with many ACRNs took 6 to 8
hours to process. The contractor, required to bill by ACRN, took 487
pages to assign $2.1 million in costs and fees to 267 ACRNs. Ten of
the ACRNs cited by the contractor had insufficient obligation
balances to cover the payment, according to the Center's records.
The remaining 257 ACRNs corresponded to 8 annual appropriations
covering from 1 to 5 fiscal years and included Army, Air Force, and
general defense funds. Of the 257 transactions processed,
38 were for less than $10, and some involved debits or credits for
pennies. Unresolved discrepancies, such as insufficient funds on
some ACRNs, have persisted for about 3 years, and the contract is
currently scheduled for reconciliation. The contractor believes the
contract was underpaid by about $2.6 million, as of September 1996.
Even for a simple purchase, assigning numerous ACRNs can cause
extensive and costly rework, and provide information of questionable
management value. For example, a $1,209 Navy contract for children's
toys, candy, and holiday decorations for a child care center was
written with most line items (e.g., bubble gum, tootsie rolls, and
balloons) assigned a separate ACRN. A separate requisition number
was generated for each item ordered, and a separate ACRN was assigned
for each requisition. In total, the contract was assigned 46 ACRNs
to account for contract obligations against the same appropriation.
To record this payment against the 1 appropriation, the Center had to
manually allocate the payment to all 46 ACRNs. Figure 4 is an actual
portion of this contract showing the ACRNs assigned to each item.
Figure 4: Contract Excerpt
(See figure in printed
edition.)
Source: DOD.
The contract was modified three times--twice to correct funding data
and once to delete funding for out-of-stock items. The modification
deleting funding did not cite all of the affected ACRNs. The Center
made errors in both entering and allocating payment data, compounding
errors made in the modification. Consequently, the Center allocated
payment for the toy jewelry line item to fruit chew, jump rope, and
jack set ACRNs--all of which should have been deleted by
modification. Contract delivery was completed in March 1995, but
payment was delayed until October 1995. Center officials
acknowledged that this payment consumed an excessive amount of time
and effort when compared to the time to process a payment charged to
only one ACRN. The contract could have been assigned a single ACRN,
according to a Navy official, thus making it easier to pay without
losing useful information. A single ACRN would also have
significantly reduced the amount of data entered into the system and
the opportunities for errors.
In addition, sometimes contracts do not require contractors to
provide the accounting detail necessary to allocate the payments. In
these instances, the Center prorates payments among ACRNs. These
prorations have little relationship to the contractor's actual
performance and may cause funds to be initially paid from the wrong
appropriation. As an example, the Center's proration of development
and procurement costs on an Army contract understated the development
expenditures of the contractor. According to a DOD program official,
the understatement frustrated the program office's initial request
for additional development funding because the Army's official
accounting records incorrectly showed adequate development funds as
being available. The DOD Inspector General identified the proration
issue as a problem in March 1992, and DFAS is attempting to resolve
the issue with the Inspector General.\8
Allocating progress payments can also contribute to later payment
problems when the Center liquidates progress payments. As items are
delivered and the actual charges to the various ACRNs become known,
Center employees adjust the amounts previously prorated against the
ACRNs. They also incrementally cancel the debt the contractor owed
the government for the contract financing it received. This
adjustment process is known as liquidation of contract financing. In
1995, we reported that errors in liquidating progress payments were
the most frequent cause of overpayments identified by Columbus Center
analysis.\9 Due to the complex issues involved, we have undertaken a
separate review of progress payment processing.
User requirements for detailed accounting can place unreasonable or
unachievable demands on the payment system. Moreover, DOD's current
pricing structure does not reflect the time it takes DFAS to meet
user requirements. Thus, the user has little incentive to critically
evaluate the level of detail being required and its associated costs.
--------------------
\8 Titan IV Program (92-064 Mar. 31, 1992), DOD, Office of the
Inspector General.
\9 DOD Procurement: Millions in Contract Payment Errors Not Detected
and Resolved Promptly (GAO/NSIAD-96-8, Oct. 6, 1995).
COMMERCIAL BEST PRACTICES
------------------------------------------------------------ Letter :4
The four organizations we visited have reported significant
improvements in service and reductions in cost by reengineering their
payment systems and adopting process improvements. These
organizations have emphasized the need to approach payment
reengineering as a long-term effort focusing on continual improvement
and viewing contract payments as part of the total acquisition
process. The outcome of their reengineering efforts, according to
these organizations, combined technological improvements with
streamlined processes and included:
-- consolidating and centralizing payment organizations;
-- developing fully integrated automated systems and using
electronic data interchange;
-- implementing simplified processes, to include eliminating one of
three documents typically used to make a payment; and
-- using alternative procurement practices, such as use of purchase
cards, for smaller purchases.
More details on the results of our visits to four nonfederal
organizations is discussed in appendix I.
Two of the private-sector organizations we visited had available
processing costs. They reported that reengineering reduced their
direct labor costs to process a contract payment to less than $3--a
30- to 50-percent reduction. Moreover, the organizations we visited
reported that payment productivity increased. For example, one
reported that the annual number of invoices processed per full-time
employee equivalent (FTE) increased from about 8,500 to 16,400, a
93-percent increase. In contrast, the Columbus Center processes an
average of about
1,000 invoices per individual per year.\10
--------------------
\10 Based on about 1.2 million invoices paid divided by the total
payment personnel in the Center's disbursing section and three
payment directorates. FTE data was not available.
DOD IS ADDRESSING ITS PAYMENT
PROBLEMS, BUT IT CAN DO MORE
------------------------------------------------------------ Letter :5
DOD is aware of the seriousness of its payment problems and is taking
steps to address them, including testing and adopting some commercial
best practices. In the shorter term, DOD is attempting to further
automate the payment process and is testing streamlined payment
practices. Its longer-term initiative involves the development and
introduction of procurement and payment systems that will share
common data. While these are positive steps, there are other actions
DOD can take to better ensure it effectively addresses and resolves
its payment problems, to include further exploring the best practices
used by organizations to reengineer their payment systems.
DOD'S CONTRACT PAYMENT
INITIATIVES
---------------------------------------------------------- Letter :5.1
DOD is developing two systems to replace 76 procurement and 8 payment
systems. The procurement and payment systems are expected to share
common data, thus providing one-time entry of contract data,
including invoice and receiving and acceptance documents. By doing
this, DOD expects to eliminate redundant data entry, data
inconsistencies, and hard copy dependence. The payment system,
according to DOD, is scheduled for implementation in fiscal year 1999
and both systems are planned to be fully operational by fiscal year
2004.
While DOD is developing these systems, DFAS is taking other steps to
automate its payment process and reduce manual entry. DFAS'
initiatives include:
-- upgrading the Columbus Center's existing payment system with
electronic data interchange (EDI) capabilities so that several
of DOD's present contract writing systems can transmit data
electronically;
-- implementing a software application that automates a portion of
the manual payment process;
-- implementing document imaging, which converts hard copies to
electronic images;
-- increasing the use of electronic funds transfer;\11 and
-- developing a capability to electronically access contract and
modification information from a single source using DOD's
private network.
DOD also has efforts to streamline its payment processes. It
continues to expand its use of the purchase card\12 and has formed
two teams to recommend better ways for using the card. In addition,
in August 1996, the Naval Air Systems Command (NAVAIR) directed its
program managers to limit the collection of financial and budgetary
information. By doing so, it hopes to simplify contracts by reducing
the number of ACRNs.
DOD has other initiatives to streamline the payment process for
contracts not administered by DCMC. If successful, a DOD official
said it may apply them to DCMC-administered contracts. For example,
-- The Los Angeles Air Force Base is planning a pilot to eliminate
invoices for purchases under $100,000. It wants to use bar code
and EDI technology to transmit receipt information to the
DFAS-Denver paying office, match information to the purchase
order, and trigger payments. The Defense Commissary Agency
eliminated the need for an invoice in 1994, and, according to
DOD, achieved significant savings.
-- The DFAS-Denver paying office plans to pay for certain purchases
under $2,500 without matching to a receipt. It intends to
control payments by auditing a sample of paid invoices.
--------------------
\11 Per the Federal Financial Management Act of 1994 (31 U.S.C.
3332, as amended by P.L. 104-134), all federal payment must be made
by electronic funds transfer after January 1, 1999. The Secretary of
the Treasury may waive the requirement for certain types of payments
or payees.
\12 According to DOD, during the first quarter of fiscal year 1997,
the card was used to make 935,750 purchases valued at $410 million.
ADDITIONAL ACTIONS NEEDED
---------------------------------------------------------- Letter :5.2
While DOD's initiatives are positive steps and may improve its
payment process efficiency and reduce costs, there are additional
steps DOD needs to take as it implements its strategy for improving
its contract payment system.
While DOD plans to improve the linkage between the payment and
procurement systems to improve accuracy and reduce processing costs,
there remains the issue of what to do with the inaccurate data
already in the existing system. According to DFAS officials, while
the transferred data will be tested for logic errors, such as missing
contract numbers, verification for accuracy would require contract
reconciliation. They said limited resources restrict the number of
reconciliations they can complete. According to DOD, it has not yet
made a decision on how to avoid transferring erroneous data to the
new system, but it believes that other initiatives may help minimize
errors.
The current system also contains contracts that DFAS considers
unreconcilable because of missing documents. In March 1996, DFAS
proposed that DCMC negotiate settlements with contractors for 57
unreconcilable contracts, permitting DOD to close these contracts.
In October 1996, DCMC directed its administrative contracting
officers to settle these contracts within 180 days. DOD now needs to
decide what to do with all the other unreconcilable contracts. It
needs to establish an overall policy for closing out existing
contracts that cannot be reconciled because of incomplete data. That
policy should take into account such factors as the age and
complexity of the contract, the dollar value of the discrepancy, and
the possibility of multiple errors.
DOD's initiatives do not fully streamline the contract payment
process. DFAS still matches multiple documents before making a
payment. However, there may be appropriate opportunities to
eliminate the requirement to match payments to invoices, such as when
the existence of a receiving report constitutes sufficient evidence
that a payment is owed. This practice is consistent with our
guidance to federal agencies.\13 Commercial best practices provide
some lessons on how this might be done while maintaining adequate
controls (see p. 26).
Alternate procurement practices for small purchases, such as use of
the purchase card, are not being fully used. As shown in table 2, 21
percent of the DCMC-administered contracts had a value of $2,500 or
less.
Table 2
Contract Value Per Contract
Number Cumula
of tive
contra percen
Contract values cts t
------------------------------------------------------ ------ ------
$0 452 0
$1 to $100 3,265 2
$101 to $2,500 41,836 21
$2,501 to $10,000 40,408 40
$10,001 to $100,000 68,481 71
$100,001 to $1,000,000 42,753 91
more than $1,000,000 19,713 100
======================================================================
Total 216,90
8
----------------------------------------------------------------------
Source: GAO analysis of "active" contracts from the MOCAS system,
March-April 1996.
Contracts of $2,500 or less are within the current threshold for
micropurchases and could be paid using the government purchase
card.\14 While DOD is expanding its use of purchase cards, table 2
suggests that there are even more opportunities to streamline the
process, through increased use of purchase cards or other means.
DOD recognizes that it is costly to account for payments at the ACRN
level and that, in some instances, the information obtained may be
inaccurate and of questionable value. While DOD is continuing to
review how best to improve the process, DOD officials believe that
the information collected is necessary to comply with the
Anti-Deficiency Act and other management requirements.
We recognize the importance of compliance with the Anti-Deficiency
Act; however, we do not believe that DOD's current detail level of
accounting is required to achieve this compliance. Our analysis
indicates that DOD's current detail level of accounting is driven by
internal management decisions regarding the allotment of
appropriations and not the Anti-Deficiency Act or any other
regulations prescribed under this act. We agree that once these
allotments are made, the requirements of the Anti-Deficiency Act are
imposed. DOD's current accounting detail goes beyond the
requirements of this act because appropriations are allocated and
suballocated. In some instances, this level of fund distribution may
be desired for internal management purposes. However, current DOD
initiatives are moving away from the detail levels and toward a
higher level of fund distribution and obligation accounting. For
example, as mentioned earlier, NAVAIR has a policy prohibiting the
suballocation of funds to other NAVAIR organizational units within
the same program office, thereby limiting the accounting detail and
reducing the number of unique contract ACRNs.
--------------------
\13 GAO Policy and Procedures Manual for the Guidance of Federal
Agencies, Title 7, "Fiscal Procedures."
\14 Micropurchases are exempt from the Buy America Act, certain small
business requirements, and the general requirement for competition.
CONCLUSIONS AND RECOMMENDATIONS
------------------------------------------------------------ Letter :6
It is imperative that DOD achieve cost-effective control over its
payment process. Otherwise, it continues to risk hundreds of
millions of dollars in potential overpayments and other financial
management and accounting control problems. Further, improving the
efficiency of the payment process could save additional millions of
dollars annually in reduced processing costs. Improving DOD's
payment system will not be an easy or quick undertaking. It will
require continued top management attention and support for many years
to come.
DOD is moving in the right direction in attempting to strengthen its
use of automated systems, ensure that these systems are integrated,
and adopt best practices. However, when and to what degree these
actions will correct its problems remains to be seen. Further,
additional steps can be taken to ensure that the payment problems are
effectively and efficiently addressed, including increased use of
purchase cards for small purchases and reduction in the requirement
to match payments to invoices if other controls are in place. DOD
might also benefit from further examining best practices of
organizations that have reengineered their contract payments process.
We recommend that the Secretary of Defense direct the DOD Comptroller
and the Under Secretary of Defense for Acquisition and Technology, as
a part of their improvement strategy, to:
-- thoroughly evaluate the information requirements of the user,
procurement, and accounting communities in terms of their impact
on the payment process and on the process' ability to produce
useful information, in order to reduce the amount of detail
accounting placed on the payment center;
-- evaluate whether the pricing structure that the Columbus Center
uses to charge its customers for accounting services needs to
better reflect the cost of servicing contracts, particularly
where the customer requires costly detailed expenditure
information;
-- establish a DOD-wide policy for closing out existing contracts
that cannot be reconciled because accurate and complete data are
lacking. Such a policy should take into account such factors as
the age and complexity of the contract, the dollar value of the
discrepancy, and the possibility of multiple errors; and
-- explore increased opportunities for using best practices,
including streamlined payment techniques, such as purchase
cards. Twenty-one percent of DCMC-administered contracts paid
by the Columbus Center were $2,500 or less. In addition,
consider eliminating the requirement to match payments to
invoices, where appropriate, such as when the existence of a
receiving report may constitute sufficient evidence that a
payment is owed.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :7
In commenting on a draft of this report, DOD said that the report (1)
does not address some of the major factors contributing to the
complexity of the contract payment process, (2) over simplifies the
applicability and implementation of best practices, and (3) does not
present the full scope of DOD's aggressive improvement initiatives.
DOD also indicated that most of the recommended actions were underway
within the Department. However, none had been completed. DOD has a
long way to go before its payment problems are under control.
We recognize that there may well be other factors contributing to
DOD's payment problems, including the complexity of contracting
requirements for major weapon systems. However, our review indicated
that effectively addressing the factors highlighted in this report is
key to DOD's ability to correct the payment problems we identified in
this and in previous reports.
We also recognize that DOD is aware of the seriousness of its payment
problems and is taking steps to address them. The draft report
discussed a number of DOD initiatives to address its payment
problems, but based on DOD's comments, we have included an additional
DOD initiative in the final report.
We acknowledge in the report that DOD is exploring the use of some
best practices. During our review, we attempted to identify other
best practices that might be worth further examination by DOD. The
scope of our review did not include a detail examination of each best
practice and the feasibility of its adoption, or the legislative and
regulatory changes that might be required before implementing these
practices. We believe, nevertheless, that there may be additional
opportunities for DOD to take advantage of best practices and we
present information on companies that have reengineered their payment
practices to illustrate the types of initiatives they undertook. As
DOD examines these best practices, it will need to examine the
legislative or regulatory impacts of their adoption. In this regard,
in other work we have underway, we found that DOD lacks the
information necessary to analyze the costs and benefits of
legislative initiatives it believes would streamline its payment
processes.
DOD's comments refer to five recommendations. We have consolidated
them into four recommendations in the final report. DOD's comments
are presented in their entirety in appendix II, along with our more
detailed evaluation of them.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8
To determine the factors contributing to payment process errors and
cost, and DOD's efforts to improve its payment process, we
interviewed officials and reviewed supporting documentation from the
-- Office of the Under Secretary of Defense Comptroller/Chief
Financial Officer, Office of the Principal Deputy Under
Secretary of Defense for Acquisition and Technology, Deputy
Under Secretary of Defense for Acquisition Reform, Washington,
D.C.;
-- Defense Finance and Accounting Service Headquarters, Navy
Finance and Accounting Office, Office of the Assistant Secretary
of Defense Command, Control, Communications, and Computer
Systems Directorate, Department of the Navy's Office of Research
Development and Acquisition, Arlington, Virginia;
-- Army Materiel Command, Alexandria, Virginia;
-- Defense Logistics Agency, Fort Belvoir, Virginia;
-- Air Force Materiel Command, Dayton, Ohio;
-- Army Aviation and Troop Command, Defense Finance and Accounting
Service, St. Louis, Missouri; and
-- Defense Finance and Accounting Service, Columbus Center,
Columbus, Ohio.
We also obtained information from Coopers & Lybrand LLP and KPMG Peat
Marwick, LLP firms DOD engaged to assist in resolving its contract
payment problems.
To determine the characteristics of DCMC-administered contracts paid
by the Columbus Center, we obtained contract and payment data from
the MOCAS system the Center used to pay contracts. We analyzed those
contracts classified as "both physically and administratively active,
and have line items left to be shipped." We did not statistically
verify the accuracy of the data.
To identify best commercial practices that DOD might adopt to further
enhance its payment process, we reviewed articles, books, and on-line
databases on reengineering; identified organizations that were
highlighted as developing and implementing innovative management
practices; and visited the following organizations:
-- Electronic Data Systems, Plano, Texas;
-- the Boeing Company, Seattle, Washington;
-- ITT Automotive, Auburn Hills, Michigan; and
-- University of California, Berkeley, California.
At each organization, we discussed and obtained documentation related
to the organization's reengineering efforts associated with contract
payments.
We also obtained information from an accounts payable reengineering
conference and workshop, which included case studies from various
companies and consulting firms. However, we did not independently
verify cost data obtained from DOD or the organizations we visited.
We conducted our review between December 1995 and October 1996 in
accordance with generally accepted government auditing standards.
---------------------------------------------------------- Letter :8.1
As agreed with your offices, we plan no further distribution of this
report until 30 days from its issue date unless you publicly announce
its contents earlier. At that time, we will send copies to the
Secretary of Defense; the Director, Office of Management and Budget;
and other interested congressional committees. We will also make
copies available to others upon request.
Please contact me at (202) 512-4587 if you or your staff have any
questions concerning this report. Major contributors to this report
are listed in appendix III.
David E. Cooper
Associate Director
Defense Acquisitions Issues
BEST PRACTICES OF FOUR NONFEDERAL
ORGANIZATIONS
=========================================================== Appendix I
The nonfederal organizations we visited--Boeing, Electronic Data
Systems, ITT Automotive, and the University of California at
Berkeley--reported significant improvement in efficiencies while
reducing administrative costs of paying invoices by implementing best
practices. These organizations undertook a fundamental reassessment
of the costs and benefits of process controls, known as risk
management. They focused on a long-term effort of continual
improvements with contract payments viewed as an integral part of the
acquisition process. In general, these organizations combined
technological improvements with streamlined processes to improve
service and reduce costs.
RISK MANAGEMENT
------------------------------------------------------- Appendix I:0.1
Organization officials said that one key to successful reengineering
was a fundamental reevaluation of the nature and extent of controls
required in their organizations. Competition demands for cost and
cycle time reductions forced these organizations to assess whether
the cost of controls exceeded the potential risk for exposure.
According to these officials, making this assessment allowed the
organizations to eliminate non-value added activities and streamline
their processes.
At a reengineering accounts payable conference, a consulting firm
pointed out that reducing organization controls meant that senior
management had to ensure a culture of high integrity and values. At
the same time, compliance should be verified by sampling transactions
and reviewing exception-based information. For example, in
establishing its purchase card program, one organization made it
clear that with a simplified procurement process came responsibility
and accountability. The organization indicated that if a random
audit revealed an employee misused the card, the organization might
suspend the employee's card and fire the employee.
ORGANIZATIONAL IMPROVEMENT
------------------------------------------------------- Appendix I:0.2
Two of the organizational changes undertaken involved (1)
consolidating the accounting activities and (2) managing contract
payments as part of the overall acquisition process. Officials from
two organizations we visited said that their companies consolidated
the accounting activities, including the payment function, into one
central location to reduce overhead and improve efficiencies. Before
reengineering, these organizations were decentralized, with each
business unit operating autonomously and generally using different
processes and systems.
The notion that procurement and payment were part of the overall,
interrelated, acquisition process was a difficult concept to get
people to appreciate, according to organization officials. They
explained that these activities are traditionally separate,
autonomous functions, and are often at odds with one another. As
with the Department of Defense (DOD), complexity of contracts and
incomplete or erroneous data provided by procurement personnel
frustrated the organization's ability to pay contracts accurately and
efficiently. Officials pointed out that successful reengineering of
the contract payment function required cooperation from procurement
personnel. It also required support from a level of management
higher than the accounting and procurement functions to ensure
cooperation.
Solutions cited by the organizations we visited included educating
procurement and payment personnel about each other's processes and
requirements, and showing the financial impact of not meeting those
requirements. In addition, one organization had payment personnel
involved during negotiations for complex contracts. According to
this company official, early involvement helped ensure simpler
payment terms or at least familiarity with the reasons behind payment
terms and made paying the contract easier.
TECHNOLOGICAL IMPROVEMENTS
------------------------------------------------------- Appendix I:0.3
Another objective of the reengineering was to have a seamless, fully
integrated system that allowed on-line access. This required some
organizations to replace their multiple software systems with one
system that integrated the procurement, payment, and accounting
functions. The organizations opted to either buy commercial software
packages or better use in-house systems already developed. One
official told us that by selecting commercial software, his
organization decided to collect less information in some cases than
it had done previously. This reduced the costs of modifying and
maintaining the software.
Besides having integrated software, organizations also used
electronic data interchange (EDI), which allows the electronic
exchange of business information, including payment information, in a
standardized format, and electronic funds transfer.
After implementing these changes, the organizations reported
labor-saving improvements. These included: (1) reduced data entry,
which increased accuracy and timeliness of invoice and document
processing and (2) reduced administrative costs through elimination
of special handling, distribution, research, and follow-up due to
errors. Less quantifiable benefits included enhanced financial
management information. One organization projected net savings of
$1.8 million a year from its integrated systems.
STREAMLINED PAYMENT
PROCESSES
------------------------------------------------------- Appendix I:0.4
Organizations we visited streamlined their processes by implementing
(1) a two-way matching process and (2) alternate procurement methods,
specifically purchase cards, for smaller purchases. The
organizations did not have data on how much these two practices had
saved. A management consultant said, however, that companies using
these practices typically achieve a savings equaling 40 percent of
processing costs.
A two-way match of documents eliminates one document used to make a
payment. Previously, approval to pay a vendor required matching data
on three documents--the purchase order, the invoice and the receiving
document. If there was a discrepancy in any of the three documents,
payment personnel had to research the discrepancy through
correspondence and telephone calls with the vendor and purchaser.
Unlike the federal government, which is required to match payments to
obligations, the visited organizations do not match payments to
budget before paying an invoice. However, they post payments to cost
accounts, which management may use in budget-to-actual comparisons.
Three of the organizations we visited eliminated one of the three
documents for matching before payment. The organizations reported
that matching two documents greatly reduced reconciliation problems,
yet still maintained payment controls. These organizations employ an
"evaluated receipts" or "pay-on-receipt" process that uses the
purchase order and the receiving document for terms, price, and
quantity. The system automatically calculates payment. The process
requires (1) having integrated systems, (2) cooperation from vendors
who may have to modify their billing and shipping documents and
practices, and (3) cooperation from those receiving the goods or
services. Figure I.1 shows both the two-way matching process and
DOD's matching process, which was discussed on page 6.
Figure I.1: Commercial Two-Way
Match and DOD's Five-Way Match
(See figure in printed
edition.)
Source: GAO.
(See figure in printed
edition.)
Three organizations we visited also increased the use of purchase
cards. Two of these organizations adopted the use of the cards after
they found that small purchases accounted for a small percentage of
purchase dollars, but represented a large percentage of the
transactions. For example, one organization determined that before
reengineering, total acquisition costs (including those for
procurement and payment) averaged about $142, but at least 20 percent
of its invoices were for purchases of less than $100. By issuing
purchase cards to the individuals who were likely to make small
purchases, the organization eliminated the need to prepare and
approve requisitions and purchase orders. In addition, the purchase
card reduced the number of payment transactions. The organization
reported eliminating about 5,000 payment transactions a month by
making
1 electronic payment to the card issuer.
Controls were maintained by setting guidelines, limiting the purchase
amount per transaction and per month, and periodic reviews of
charges. Officials noted that each card can be coded so that
purchases are charged to the proper cost accounts. One organization
official said that accounting requirements were less detailed than
previously. However, he believed the increased efficiency of
management reviews of consolidated information and savings per
transaction outweighed the usefulness of the more detailed accounting
information.
Our report on federal agencies' use of purchase cards also showed
that agencies were able to reduce labor and payment processing costs
by using purchase cards for simple purchases.\1
--------------------
\1 Acquisition Reform: Purchase Card Use Cuts Procurement Costs,
Improves Efficiency (GAO/NSIAD-96-138, Aug. 6, 1996).
REDUCED COST AND IMPROVED
PRODUCTIVITY
------------------------------------------------------- Appendix I:0.5
Two of the private-sector organizations we visited had available
processing costs. They reported that reengineering reduced their
direct labor costs to process a contract payment to less than $3--a
30- to 50-percent reduction. A study of 700 firms conducted by a
management consulting firm showed labor costs for invoice processing
ranged from $0.71 to $12.23 per invoice.
Moreover, the organizations we visited reported that payment
productivity increased. For example, one organization reported that
the annual number of invoices processed per full-time employee
equivalent (FTE) nearly doubled from about 8,500 to 16,400, a
93-percent increase. The consulting firm also reported that the
number of invoices processed per FTE ranged from about 1,900 to about
55,000 per year with an average of about 11,000 per year. The
Columbus Center processes an average of about 1,000 invoices per
individual per year.\2
(See figure in printed edition.)Appendix II
--------------------
\2 Based on about 1.2 million invoices paid divided by the total
payment personnel in the Center's disbursing section and three
payment directorates. FTE data was not available.
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
=========================================================== Appendix I
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
The following are GAO's comments on the Department of Defense's
letter dated February 7, 1997.
GAO COMMENTS
1. DOD's principal concerns are discussed and evaluated on pages 17
and 18 of this report.
2. We have modified the report to reflect the percent of dollars and
the percent of invoices paid by the Defense Finance and Accounting
Service (DFAS) Columbus.
3. We have added language to clarify our position and provided a
more detailed discussion of the basis for our conclusion, which is
presented on pages 15-16.
4. We have added additional information on DOD's initiatives and
have modified our recommendations so as to not imply that the DOD
Comptroller and the Under Secretary of Defense for Acquisition and
Technology are not working together. Our observations on DOD's
comments related to specific recommendations are discussed below.
5. We have modified the report based on this comment.
6. The report mentions that one of DOD's initiatives to eliminate
manual data entry is the use of EDI, including ANSI X-12. DFAS
currently has limited testing underway for EDI transactions.
However, as we mentioned on page 6, manual entry will be required in
certain situations.
7. The report explains "matching" in much the same way as DOD's
comment. However, DOD's comment does not discuss the procedures
followed by the Center to verify obligations in its accounting
records, or the prevalidation with the accounting station's records.
As we pointed out in the report, efforts to resolve mismatches
through invoice research, contract reconciliation, and manual
processing account for about 57 percent of average payment costs (p.
4). About one-third of the Center's contract payment personnel are
dedicated to invoice research and contract reconciliation.
8. Our report mentions that this amount is for "reconciliation
support on numerous contracts," not just the one discussed in the
paragraph.
9. We have added language to clarify our position and provided the
basis for our conclusion.
10. The 6-8 hours refers to one case we reviewed. The Columbus
Center was unable to provide us with overall data on the time
required to process a payment. We modified the report to include the
Entitlement Automation System as one of DOD's initiatives.
11. We have modified the report based on DOD's comments, but we
continue to believe that it may be not only possible, but desirable
to look for ways to reduce the amount of detailed information going
through the payment center.
12. The purpose of this recommendation is to place on those
organizations that request excessively detail payment accounting the
costs associated with these payment requirements. This action might
incentivize these organizations to look more carefully at the demands
they place on the payment system. To the extent the Department finds
that the costs associated with implementing this recommendation
exceeds its benefits, we would defer to DOD's judgment in this
regard. We are pleased that DOD has agreed to study the
recommendation's feasibility.
13. Although the Department is increasing its use of government
purchase cards, our analysis of DFAS payments show that 21 percent of
the Defense Contract Management Command (DCMC)-administered contracts
paid by DFAS, Columbus, has a value of $2,500 or less (p. 15). This
suggests to us that there may be further opportunities to streamline
the process, through increased use of purchase cards or other means.
We have modified the recommendation to indicate that there may be
other means, other than purchase cards, to streamline the payment of
small purchases.
14. The cited memorandum, dated October 25, 1996, is applicable to
57 specific contracts and does not represent a DOD-wide policy for
closing out contracts. DFAS-Columbus officials told us the Center
has no general guidance to handle unreconcilable contracts.
15. As we pointed out in our draft, vendors may have to modify their
shipping/receiving documents to conform with invoicing requirements.
Our draft also noted that elimination of the invoice is consistent
with our guidance for federal agencies, GAO Policy and Procedures
Manual for the Guidance of Federal Agencies, Title 7, "Fiscal
Procedures." At the same time, we recognize that the False Claims Act
may require some alternative evidence of a contractor request for
payment.
The draft includes a discussion of the DFAS Denver pilot. The Denver
pilot still requires three documents--the purchase order, the
invoice, and a statistical sample of the shipping/receiving
documents; whereas the evaluated receipts method requires two--the
purchase order and receiving document--and allows for 100-percent
verification of receipt of goods.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C.
Charles Thompson
David Childress
OFFICE OF GENERAL COUNSEL
Margaret Armen
DALLAS FIELD OFFICE
Hilary Sullivan
Jeffrey Knott
Jack Kriethe
Kay Muse
Joe Quicksall
James Turkett
RELATED GAO PRODUCTS
============================================================ Chapter 0
Financial Management: DOD Needs to Lower the Disbursement
Prevalidation Threshold (GAO/AIMD-96-82, June 11, 1996).
DOD Infrastructure: DOD Is Opening Unneeded Finance and Accounting
Offices (GAO/NSIAD-96-113, Apr. 16, 1996).
Defense Infrastructure: Budget Estimates for 1996-2001 Offer Little
Savings for Modernization (GAO/NSIAD-96-131, Apr. 4, 1996).
DOD Procurement: Millions in Contract Payment Errors Not Detected
and Resolved Promptly (GAO/NSIAD-96-8, Oct. 6, 1995).
DOD Infrastructure: DOD's Planned Finance and Accounting Structure
Is Not Well Justified (GAO/NSIAD-95-127, Sept. 18, 1995).
Financial Management: Challenges Confronting DOD's Reform
Initiatives (GAO/T-AIMD-95-146, May 23, 1995).
Financial Management: Challenges Confronting DOD's Reform
Initiatives (GAO/T-AIMD-95-143, May 16, 1995).
Defense Infrastructure: Enhancing Performance Through Better
Business Practices (GAO/T-NSIAD/AIMD-95-126, Mar. 23, 1995).
DOD Procurement: Overpayments and Underpayments at Selected
Contractors Show Major Problem (GAO/NSIAD-94-245, Aug. 5, 1994).
Defense Business Operations Fund: Improved Pricing Practices and
Financial Reports Are Needed to Set Accurate Prices (GAO/AIMD-94-132,
June 22, 1994).
Financial Management: DOD's Efforts to Improve Operations of the
Defense Business Operations Fund (GAO/T-AIMD/NSIAD-94-146, Mar. 24,
1994).
DOD Procurement: Millions in Overpayments Returned by DOD
Contractors (GAO/NSIAD-94-106, Mar. 14, 1994).
Financial Management: Status of the Defense Business Operations Fund
(GAO/AIMD-94-80, Mar. 9, 1994).
Financial Management: Strong Leadership Needed to Improve Army's
Financial Accountability (GAO/AIMD-94-12, Dec. 22, 1993).
Letter to the Deputy Secretary of Defense (GAO/AIMD-94-7R, Oct. 12,
1993).
Financial Management: DOD Has Not Responded Effectively to Serious,
Long-standing Problems (GAO/T-AIMD-93-1, July 1, 1993).
Financial Management: Opportunities to Strengthen Management of the
Defense Business Operations Fund (GAO/T-AFMD-93-6, June 16, 1993).
Financial Management: Navy Records Contain Billions of Dollars in
Unmatched Disbursements (GAO/AFMD-93-21, June 9, 1993).
Financial Audit: Examination of Army's Financial Statements for
Fiscal Year 1991 (GAO/AFMD-92-83, Aug. 7, 1992).
Financial Management: Immediate Actions Needed to Improve Army
Financial Operations and Controls (GAO/AFMD-92-82, Aug. 7, 1992).
Financial Management: Defense Business Operations Fund
Implementation Status (GAO/T-AFMD-92-8, Apr. 30, 1992).
Financial Audit: Aggressive Actions Needed for Air Force to Meet
Objectives of the CFO Act (GAO/AFMD-92-12, Feb. 19, 1992).
Financial Audit: Status of Air Force Actions to Correct Deficiencies
in Financial Management Systems (GAO/AFMD-91-55, May 16, 1991).
Defense's Planned Implementation of the $77 Billion Defense Business
Operations Fund (GAO/T-AFMD-91-5, Apr. 30, 1991).
*** End of document. ***