United States General Accounting Office

GAO Report to Congressional Requesters

April 1997 CONTRACT

MANAGEMENT

Fixing DOD’s Payment

Problems Is Imperative

GAO/NSIAD-97-37

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

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.

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Results in Brief 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 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

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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

Factors Contributing

to Contract Payment

Process Errors and

Cost

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.

1

High Risk Series: Defense Contract Management (GAO/HR-97-4, Feb. 1997).

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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 Disbursing


Invoice research


Contract reconciliation


Manual processing


Other


12% 30%

6%

16%

15%

21% Initial data input


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.

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Nonintegrated Computer

Systems Often Require

Manual Data Entry

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.

3

According to DOD, several of the major procurement offices do not have the capability to make

electronic transmissions.

Page 5 GAO/NSIAD-97-37 Contract Management
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Figure 2: Payment Process Information Flow

Purchase Order/Contract

Purchase Order/Contract


and Modifications

Receipt and


Acceptance

Contract Modifications

Receiving Reports Voucher Approval

Goods

Invoice


Payment

Payment Pre-validation

Disbursement Data

Adjustments

Disbursement Data

1,400


Contracting


Facilities


76 Systems

Defense


Contract


Management


Command

Contractor


(about 25,000


business units)

Defense


Contract


Audit Agency

187 Accounting


Stations


33 Systems

DFAS


Columbus


(paying office)

Treasury

Armed Services


and Defense


Agencies


(up to 64,000


receiving activities)

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

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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.

The Document Matching

Process Consumes Time

and Resources

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

4

DFAS Columbus Center MOCAS BPR Assessment, KPMG Peat Marwick, LLP, August 1995.

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.

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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.

Payment Allocations Can

Be Inaccurate, Misleading,

and of Questionable Value

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.

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Figure 3: Example of DOD’s Long Line of Accounting

Appropriation

Command

Budget Activity

Weapons System

Suballotment

Appropriation

Accounting Station

Transaction Type

Project Directive


Line Item and Suffix


for Management


Oversight


(e.g., engine


accessory)

ACRN

Service

Beginning


Fiscal 


Year

Ending


Fiscal


Year

Office of


Management


and Budget


Cost Code

Participating


Manager

Requiring


Financial


Manager

Receiving Activity

Project Unit


(e.g., engine)

Contractor


Support


Cost Code

AA 17 9395 1506 4 1 AV 031 BZ 276 0 068342 2B 000000 01030 MAS 0020

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.

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Table 1: Number of ACRNs Per

Contract Dollars in billions

Number of ACRNs

Number of

contracts

Percent of

contracts

Value of

contracts

Percent of

value

1 174,087 80 $29.7 5

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 216,908 100 $638.5 100

* 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

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46 ACRNs. Figure 4 is an actual portion of this contract showing the ACRNs

assigned to each item.

Figure 4: Contract Excerpt

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

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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.

Commercial Best

Practices

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

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).

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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

DOD Is Addressing Its

Payment Problems,

but It Can Do More

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.

10Based 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.

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DOD’s Contract Payment

Initiatives

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 card12 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

11Per 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.

12According to DOD, during the first quarter of fiscal year 1997, the card was used to make 935,750

purchases valued at $410 million.

Page 14 GAO/NSIAD-97-37 Contract Management
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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.

Additional Actions Needed 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

Page 15 GAO/NSIAD-97-37 Contract Management
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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

Contract values

Number of

contracts

Cumulative

percent

$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 216,908

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

13GAO Policy and Procedures Manual for the Guidance of Federal Agencies, Title 7, “Fiscal

Procedures.”

14Micropurchases are exempt from the Buy America Act, certain small business requirements, and the

general requirement for competition.

Page 16 GAO/NSIAD-97-37 Contract Management
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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.

Conclusions and

Recommendations

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

Page 17 GAO/NSIAD-97-37 Contract Management
B-272540 

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

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.

Page 18 GAO/NSIAD-97-37 Contract Management
B-272540 

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

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.

Page 19 GAO/NSIAD-97-37 Contract Management
B-272540 

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.

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.

Page 20 GAO/NSIAD-97-37 Contract Management
B-272540 

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

Page 21 GAO/NSIAD-97-37 Contract Management
Contents

Letter 1

Appendix I 

Best Practices of Four

Nonfederal

Organizations

24

Appendix II 

Comments From the

Department of

Defense

29

Appendix III 

Major Contributors to

This Report

40

Related GAO Products 43

Tables Table 1: Number of ACRNs Per Contract 10

Table 2: Contract Value Per Contract 16

Figures Figure 1: Activity Cost Analysis by Contract Payment Function 4

Figure 2: Payment Process Information Flow 6

Figure 3: Example of DOD’s Long Line of Accounting 9

Figure 4: Contract Excerpt 11

Figure I.1: Commercial Two-Way Match and DOD’s Five-Way

Match

27

Abbreviations

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

Page 22 GAO/NSIAD-97-37 Contract Management
Page 23 GAO/NSIAD-97-37 Contract Management
Appendix I 

Best Practices of Four Nonfederal

Organizations

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 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

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.

Page 24 GAO/NSIAD-97-37 Contract Management
Appendix I 

Best Practices of Four Nonfederal

Organizations

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

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,

Page 25 GAO/NSIAD-97-37 Contract Management
Appendix I 

Best Practices of Four Nonfederal

Organizations

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

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.

Page 26 GAO/NSIAD-97-37 Contract Management
Appendix I 

Best Practices of Four Nonfederal

Organizations

Figure I.1: Commercial Two-Way Match and DOD’s Five-Way Match

MATCH?

Accounting 


Station Records

MATCH?

Receipt

Purchase Order

Purchasing Modifies


Purchase Order No

Yes Pay Contractor

and/or Pay Contractor and Adjust Next Payment

No

Yes Pay Contractor

and/or

Obligations

Invoice

Receipt

Purchase Order

Return


Improper


Invoice

Reconcile


DFAS Records

Reconcile


DFAS


& Accounting


Station


Records

Line Item


Research

Wait for ACO or


PCO to Modify


Contract

Source: GAO.

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.

Page 27 GAO/NSIAD-97-37 Contract Management
Appendix I 

Best Practices of Four Nonfederal

Organizations

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

Reduced Cost and

Improved Productivity

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

1

Acquisition Reform: Purchase Card Use Cuts Procurement Costs, Improves Efficiency

(GAO/NSIAD-96-138, Aug. 6, 1996).

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.

Page 28 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Page 29 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

Discussed on pp. 18-19.

Discussed on p. 19.

Page 30 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

Now on p. 3.

See comment 2.

See comment 3.

See comment 4.

See comment 5.

Now on p. 2

See comment 5.

Now on p. 4

See comment 6.

Now on p. 5.

Page 31 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

See comment 7.

Now on p. 7.

See comment 8.

Now on p. 8.

See comment 5.

Now on p. 8.

See comment 9.

Now on p. 8.

See comment 10.

Now on p. 10.

See comment 5.

Now on p. 12.

Page 32 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

See comment 5.

Now on p. 14.

See comment 5.

Now on p. 15.

See comment 5.

Now p. 15.

See comment 5.

Now on p. 16.

Page 33 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

See comment 11.

See comment 12.

Page 34 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

Now recommendation 4.

See comment 13.

Now recommendation 3.

See comment 14.

Page 35 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

Now recommendation 4.

See comment 15.

Page 36 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

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.

Page 37 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

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

Page 38 GAO/NSIAD-97-37 Contract Management
Appendix II 

Comments From the Department of Defense

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.

Page 39 GAO/NSIAD-97-37 Contract Management
Appendix III 

Major Contributors to This Report

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

Page 40 GAO/NSIAD-97-37 Contract Management
Appendix III 

Major Contributors to This Report

Page 41 GAO/NSIAD-97-37 Contract Management
Appendix III 

Major Contributors to This Report

Page 42 GAO/NSIAD-97-37 Contract Management
Related GAO Products

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).

Page 43 GAO/NSIAD-97-37 Contract Management
Related GAO Products

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).

(705124) Page 44 GAO/NSIAD-97-37 Contract Management
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