Military Pay: Army National Guard Personnel Mobilized to Active Duty Experienced Significant Pay Problems
Published: 2004-01-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In light of the recent mobilizations associated with the war on terrorism, GAO was asked to determine if controls used to pay mobilized Army Guard personnel provided assurance that such pays were accurate and timely. This testimony focuses on the pay experiences of Army Guard soldiers at selected case study units and deficiencies with respect to controls over processes, human capital, and automated systems.
section_title: What GAO Found
paragraphs: The existing processes and controls used to provide pay and allowances to mobilized Army Guard personnel are so cumbersome and complex that neither DOD nor, more importantly, the mobilized Army Guard soldiers could be reasonably assured of timely and accurate payroll payments. Weaknesses in these processes and controls resulted in over- and underpayments and late active duty payments and, in some cases, large erroneously assessed debts, to mobilized Army Guard personnel. The end result of these weaknesses is to severely constrain DOD's ability to provide active duty pay to these personnel, many of whom were risking their lives in combat in Iraq and Afghanistan. In addition, these pay problems have had a profound impact on individual soldiers and their families and may adversely impact on decisions to stay in the Army Guard. For example, many soldiers and their families were required to spend considerable time, sometimes while the soldiers were deployed in remote, hostile environments overseas, seeking corrections to active duty pays and allowances. The pay process, involving potentially hundreds of DOD, Army, and Army Guard organizations and thousands of personnel, was not well understood or consistently applied with respect to determining (1) the actions required to make timely, accurate pays to mobilized soldiers, and (2) the organization responsible for taking the required actions. With respect to human capital, we found weaknesses including (1) insufficient resources allocated to pay processing, (2) inadequate training related to existing policies and procedures, and (3) poor customer service. Several systems issues were also significant factors impeding accurate and timely payroll payments to mobilized Army Guard soldiers, including (1) nonintegrated systems, (2) limitations in system processing capabilities, and (3) ineffective system edits.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss controls over payroll payments to  mobilized Army National Guard (Army Guard) soldiers. Our related report  issued in November 2003 details weaknesses in the processes, human  capital, and automated systems that impaired prompt and accurate Army  Guard payroll payments.
In response to the September 11 attacks, many Army Guard soldiers were  activated to federal duty. A reported 93,000 Army Guard soldiers— accounting for about a third of all mobilized reserve forces—were  activated as of March 2003. These forces were deployed on various  important missions across the United States and overseas in support of  Operations Noble Eagle and Enduring Freedom, including search and  destroy missions against the Taliban and al Qaeda; guarding al Qaeda  prisoners held at Guantanamo Bay; providing security at the Pentagon and  military bases; and carrying out military police functions in Iraq.  Particularly given the critical and continuing roles Army Guard soldiers  play in carrying out vital military and security missions, effective controls  are needed to provide timely and accurate pays and allowances to these  soldiers. Pay-related problems are not only costly and time-consuming to  resolve, but result in financial hardship for soldiers and their families.  In  addition, there are indications that these pay problems are beginning to  have an adverse effect on the Army’s ability to retain these valuable Army  Guard personnel.
Because current DOD operations used to pay mobilized Army Guard  soldiers relied extensively on error-prone, manual transactions entered into  multiple, nonintegrated systems, we did not statistically test controls in this  area. Instead, we audited six Army Guard units as case studies to provide a  detailed perspective on the nature of payroll deficiencies with respect to  Army Guard soldiers. As requested, we also conducted a limited review of  one unit currently deployed in Iraq to identify any evidence of continuing  pay problems. Further details on our scope and methodology and the  results of the case studies can be found in our related report.
Today, I will summarize the results of our work with respect to (1) the  extent of pay problems we identified at our case study units, (2)  deficiencies in the three key control areas of processes, people, and  automated systems, and (3) recommended actions for addressing these  issues.
subsections: section_title: Case Studies Illustrate Significant Pay Problems
paragraphs: We found significant pay problems at the six Army Guard units we audited  related to processes, human capital, and systems. The six units we audited,  including three special forces and three military police units, were:  Colorado B Company, 5th Battalion, 19th Special Forces  Virginia B Company, 3rd Battalion, 20th Special Forces  West Virginia C Company, 2nd Battalion, 19th Special Forces  Mississippi 114th Military Police Company  California 49th Military Police Headquarters and Headquarters   Maryland 200th Military Police Company These units were deployed to help perform a variety of critical domestic  and overseas mission operations, including search and destroy missions in  Afghanistan against Taliban and al Qaeda forces, guard duty for al Qaeda  prisoners in Cuba, and  providing security at the Pentagon shortly after the  September 11, 2001, terrorist attacks.
For the six units we audited, we found significant pay problems involving  over $1 million in errors. These problems consisted of underpayments,  overpayments, and late payments that occurred during all three phases of  Army Guard mobilization to active duty. For the 18-month period from  October 1, 2001, through March 31, 2003, we identified overpayments,  underpayments, and late payments at the six case study units estimated at  $691,000, $67,000, and $245,000, respectively. In addition, for one unit,  these pay problems resulted in largely erroneous debts totaling $1.6  million. Overall, we found that 450 of the 481 soldiers (94 percent) from our  case study units had at least one pay problem associated with their  mobilization to active duty. Table 1 shows the number of soldiers at our  case study units with at least one pay problem during each of the three  phases of active duty mobilization.
Some of the pay problems we identified included the following.
DOD erroneously billed 34 soldiers in a Colorado National Guard  Special Forces unit an average of $48,000 each in payroll-related debt— most of which was erroneous.  While we first notified DOD of these  issues in April and sent a follow-up letter in June 2003, the largely  erroneous total debt for these soldiers of about $1.6 million remained  unresolved at the end of our audit in September 2003.
As a result of confusion over responsibility for entering promotion- related transactions associated with a Colorado soldier’s promotion, the  soldier’s spouse had to obtain a grant from the Colorado National Guard  to pay bills while her husband was in Afghanistan.
Some soldiers did not receive payments for up to 6 months after  mobilization and others still had not received some of their active duty  pays by the conclusion of our audit.
Ninety-one of 100 members of a Mississippi National Guard military  police unit deployed to Guantanamo Bay, Cuba, did not receive the  correct amount of Hardship Duty Pay.
One soldier from the Mississippi unit was paid $9,400 in active duty pay  during the 3 months following an early discharge for drug-related  charges.
Forty-eight of 51 soldiers in a California National Guard military police  unit received late payments because the unit armory did not have a copy  machine available to make copies of needed pay-related documents.
Four Virginia Special forces soldiers injured in Afghanistan, unable to  resume their civilian jobs, experienced problems in receiving entitled  active duty pays and related health care.
Pays for 13 soldiers continued for 6 weeks after early release from  active duty.  88 soldiers were mistakenly paid for 2 types of hardship duty pay.
In some cases, the problems we identified may have distracted these  professional soldiers from mission requirements, as they spent  considerable time and effort while deployed attempting to address these  issues.  Further, these problems may adversely affect the Army’s ability to  retain these valuable personnel.
subsections: section_title: Pay Problems Continue with Unit Currently Deployed to Iraq
paragraphs: Our limited review of the pay experiences of the soldiers in the Colorado  Army Guard’s 220th Military Police Company, which was mobilized to  active duty in January 2003, sent to Kuwait in February 2003, and deployed  to Iraq on military convoy security and highway patrol duties in April 2003,  indicated that some of the same types of pay problems that we found in our  six case study units continued to occur. Of the 152 soldiers mobilized in  this unit, our review of available records identified 54 soldiers who were  either overpaid, underpaid, or received entitled active duty pays and  allowances over 30 days late, or for whom erroneous pay-related debts  were created. We found that these pay problems could be attributed to  control breakdowns similar to those we found at our case study units,  including pay system input errors associated with amended orders, delays  and errors in coding pay and allowance transactions, and slow customer  service response. For example, available documentation and interviews  indicate that while several soldiers submitted required supporting  documentation to start certain pays and allowances at the time of their  initial mobilization in January 2003, over 20 soldiers were still not receiving  these pays in August 2003.   This unit remained deployed in Iraq as of  January 2004.
section_title: Mobilized Army Guard Pay Process, Human Capital, and Systems Deficiencies
paragraphs: Deficiencies in three key areas—process, human capital, and systems— were at the heart of the pay problems we identified.  Processes were not  well understood or consistently applied and were outdated in several  instances. Insufficient resources, inadequate training, and poor customer  service impaired the human capital operations in this area.  Further, the  automated systems supporting pays to mobilized Army Guard soldiers  were ineffective because they were (1) not integrated and (2) constrained  by limited processing capabilities and ineffective system edits.
subsections: section_title: Process Deficiencies
paragraphs: A substantial number of payment errors we found were caused, at least in  part, by unclear procedural requirements for processing active duty pay  and allowance entitlements to mobilized Army Guard soldiers. Complex,  cumbersome processes, developed in piecemeal fashion over a number of  years, provide numerous opportunities for control breakdowns.  The DOD  Financial Management Regulation guidance on pay and allowance  entitlements alone covered 65 chapters.  Procedural requirements,  particularly in light of the numerous organizations issuing guidance  applicable to this area, and potentially hundreds of organizations and  thousands of personnel involved in implementing this guidance, were not  well understood or consistently applied with respect to determining (1) the  actions required to make timely, accurate active duty pays to mobilized  Army Guard soldiers and (2) the component responsible, among Army  Guard, active Army, and DFAS, for taking the required actions. For  example, within the Army Guard, 54 state-level personnel and another 54  state-level pay offices—United States Property and Fiscal Offices  (USPFOs) are integrally involved in the process to pay mobilized Army  Guard soldiers. Further, we found instances in which existing guidance was  out of date—some of which still reflected practices in place in 1991 during  Operation Desert Storm.
subsections: section_title: Procedural Requirements Not Clear
paragraphs: Unclear procedural requirements for processing active duty pays  contributed to erroneous and late pay and allowances to mobilized Army  Guard soldiers.  We found existing policies and procedural guidance were  unclear with respect to amending active duty orders, stopping active duty  pays for early returning soldiers, and extending active duty pays to injured  soldiers.
At two of our case study locations, military pay technicians using vague  guidance made errors in amending existing orders.  One of these errors  resulted in 34 soldiers being billed a largely erroneous total debt of about  $1.6 million.
Procedural guidance was not clear regarding how to carry out assigned  responsibilities for soldiers returning from active duty earlier than their  unit.    DFAS-IN guidance provides only that “the supporting USPFO will be  responsible for validating the status of any soldier who does not return to a  demobilized status with a unit.”  The guidance did not state how the USPFO  should be informed of soldiers not returning with their unit, or what means  the USPFO should use to validate the status of any such soldiers.  One  USPFO informed us that they became aware that a soldier had returned  early from a deployment when the soldier appeared at a weekend drill  while his unit was still deployed.  In four of six case study units, we found  instances in which Army Guard soldiers’ active duty pays were not stopped  at the end of their active duty tour when they were released from active  duty earlier than their units.  One Mississippi Army Guard soldier was paid  $9,400 in active duty pay during the 3 months following an early discharge  for drug-related offenses.
We also found a lack of specific procedures to ensure timely processing of  active duty medical extensions for injured Army Guard soldiers.  Even  though Army regulations provide that Army Guard soldiers with active duty  medical extension status are entitled to continue to receive active duty  pays, allowances, and medical benefits, we found that four soldiers from  the Virginia 20th Special Forces, B Company, 3rd Battalion in that status  experienced significant pay problems and related problems in obtaining  needed medical services to treat injuries or illnesses incurred while on  active duty in part as a result of a lack of clearly defined implementing  procedures in this area.
Individual Case Illustration: Unclear Regulations for Active Duty Medical  Extension Four soldiers who were injured while mobilized in Afghanistan for Operation Enduring  Freedom told us that customer service was poor and no one was really looking after  their interest or even cared about them. These problems resulted in numerous personal  and financial difficulties for these soldiers.    ·  “Not having this resolved means that my family has had to make greater sacrifices and  it leaves them in an unstable environment. This has caused great stress on my family  that may lead to divorce.” ·  “My orders ran out while awaiting surgery and the care center tried to deny me care.
My savings account was reduced to nearly 0 because I was also not getting paid while  I waited. I called the Inspector General at Walter Reed and my congressman. My  orders were finally cut. In the end, I was discharged 2 weeks before my care should  have been completed because the second amendment to my orders never came and I  couldn’t afford to wait for them before I went back to work. The whole mess was  blamed on the ‘state’ and nothing was ever done to fix it.”  ·  One sergeant was required to stay at Womack, the medical facility at Fort Bragg,  North Carolina, while on medical extension. His home was in New Jersey. He had not  been home for about 20 months, since his call to active duty. While he was recovering  from his injuries, his wife was experiencing a high-risk pregnancy and depended upon  her husband’s medical coverage, which was available while he remained in active duty  status. Even though she lived in New Jersey, she scheduled her medical appointments  near Fort Bragg to be with her husband. The sergeant submitted multiple requests to  extend his active duty medical extension status because the paperwork kept getting  lost. Lapses in obtaining approvals for continued active duty medical extension status  caused the sergeant’s military medical benefits and his active duty pay to be stopped  several times. He told us that because of gaps in his medical extension orders, he was  denied medical coverage, resulting in three delays in scheduling a surgery. He also  told us he received medical bills associated with his wife’s hospitalization for the  delivery of their premature baby as a result of these gaps in coverage.
section_title: Organizational Responsibilities Not Clear
paragraphs: We also found that existing policies and procedures were vague with  respect to organizational responsibilities.  Confusion centered principally  on the lack of clear guidance with respect to responsibility and  accountability for Army Guard personnel as they move from state control  to federal control and back again.  To be effective, current processes rely  on close coordination and communication between state (Army Guard unit  and state-level command organizations) and federal (active Army finance  locations at mobilization/demobilization stations and at area servicing  finance offices) organizations.  However, we found a significant number of  instances in which critical coordination requirements were not clearly  defined. For example, at one of our case study locations, we found that, in  part because of confusion over responsibility for starting location-based  pays, a soldier was required to carry out a dangerous multiday mission to  fix these pays.
Individual Case Illustration: Difficulty in Starting In-Theatre Pays A sergeant with the West Virginia National Guard Special Forces unit was stationed in  Uzbekistan with the rest of his unit, which was experiencing numerous pay problems.  The sergeant told us that the local finance office in Uzbekistan did not have the systems  up and ready, nor available personnel who were familiar with DJMS-RC. According to the  sergeant, the active Army finance personnel were only taking care of the active Army  soldiers’ pay issues. When pay technicians at the West Virginia USPFO attempted to  help take care of some of the West Virginia National Guard soldiers’ pay problems, they  were told by personnel at DFAS-Indianapolis not to get involved because the active Army  finance offices had primary responsibility for correcting the unit’s pay issues.
Eventually, the sergeant was ordered to travel to the finance office at Camp Doha,  Kuwait, to get its assistance in fixing the pay problems. As illustrated in the following  map. This trip, during which a soldier had to set aside his in-theatre duties to attempt to  resolve Army Guard pay issues, proved to be not only a major inconvenience to the  sergeant, but was also life-threatening. At Camp Doha (an established finance office), a  reserve pay finance unit was sent from the United States to deal with the reserve  component soldiers’ pay issues. The sergeant left Uzbekistan for the 4-day trip to Kuwait.  He first flew from Uzbekistan to Oman in a C-130 ambulatory aircraft (carrying wounded  soldiers). From Oman, he flew to Masirah Island. From Masirah Island he flew to Kuwait  International Airport, and from the airport he had a 45-minute drive to Camp Doha. The  total travel time was 16 hours. The sergeant delivered a box of supporting documents  used to input data into the system. He worked with the finance office personnel at Camp  Doha to enter the pertinent data on each member of his battalion into DJMS-RC. After 2  days working at Camp Doha, the sergeant returned to the Kuwait International Airport,  flew to Camp Snoopy in Qatar, and from there to Oman. On his flight between Oman and  Uzbekistan, the sergeant’s plane took enemy fire and was forced to return to Oman. No  injuries were reported. The next day, he left Oman and returned safely to Uzbekistan. 1 After collecting supporting documentation for company pay updates, Sgt. departs Uzbekistan and flies to Oman.  2 Sgt. flies to Masirah Island off the coast of Oman.  3 Sgt. flies from Masirah Island to Kuwait International Airport. 4 Sgt. travels 45 minutes to Camp Doha, Kuwait, arrives with supporting documentation, and uses Camp Doha finance office to input name, SSN, rank, arrival date, and other pertinent information for each battalion member.  Sgt. returns to Kuwait International Airport.  5 Sgt. flies from Kuwait International Airport to Camp Snoopy, Qatar. 6 Sgt. flies from Camp Snoopy to Oman. 7 On initial attempt to fly from Oman back to Uzbekistan, Sgt.'s flight comes under enemy fire and returns to Oman.  8 Sgt. flies from Oman, returning to duty station in Uzbekistan.
U. A. E.
section_title: Guidance Outdated
paragraphs: We found several instances in which existing DOD and Army regulations  and guidance in the pay and allowance area were outdated and conflict  with more current legislation and DOD regulations.  Some existing  guidance reflected pay policies and procedures dating back to Operations  Desert Shield and Desert Storm in 1991.  While we were able to associate  pay problems with only one of these outdated requirements, there is a risk  that they may also have caused as yet unidentified pay problems.  Further,  having out-of-date requirements in current regulations may contribute to  confusion and customer service issues.
section_title: Human Capital Issues
paragraphs: With respect to human capital, we found weaknesses including (1)  insufficient resources allocated to pay processing, (2) inadequate training  related to existing policies and procedures, and (3) poor customer service.    The lack of sufficient numbers of well-trained, competent military pay  professionals can undermine the effectiveness of even a world-class  integrated pay and personnel system.  A sufficient number of well-trained  military pay staff is particularly crucial given the extensive, cumbersome,  and labor-intensive process requirements that have evolved to support  active duty pay to Army Guard soldiers.  GAO’s Standards for Internal  Control in the Federal Government state that management should take  steps to ensure that its organization has the appropriate number of  employees, and that appropriate human capital practices, including hiring,  training, and retention, are in place and effectively operating.
subsections: section_title: Insufficient Numbers of Military Pay Processing Personnel
paragraphs: Our audit identified a lack of knowledgeable personnel dedicated to  entering and processing active duty pays and allowances to mobilized  Army Guard soldiers.  As discussed previously, both active Army and Army  Guard military pay personnel play key roles in this area.   Army Guard  operating procedures provide that the primary responsibility for  administering mobilized Army Guard soldiers’ pay rests with the 54  USPFOs.  These USPFOs are responsible for processing pay for drilling  reservists along with the additional surge of processing required for  initiating active duty pays for mobilized soldiers.
Our audit work identified concerns with USPFO military pay sections  operating at less than authorized staffing levels and recruiting and  retention challenges due to the positions being at a lower pay grade level.  In addition, few of the military pay technicians on board at the six locations  we audited had received formal training on pay eligibility and pay  processing requirements for mobilized Army Guard personnel.
Although the Army and DFAS have established an agreement that in part  seeks to ensure that resources are available to provide appropriately  skilled pay personnel at mobilization stations to support surge processing,  no such contingency staffing plan exists for the USPFOs.  As discussed  previously, pay problems at the case study units were caused in part by  USPFO military pay sections attempting to process large numbers of pay  transactions without sufficient numbers of knowledgeable personnel.
Lacking sufficient numbers of personnel undermines the ability of the  USPFO pay functions to carry out established control procedures.  For  example, our audits at the six case study units showed that, for the most  part, proposed pay transactions were not independently reviewed as  required by DJMS-RC operating procedures before they were submitted for  processing.  USPFO officials told us that because of the limited number of  available pay technicians, this requirement was often not followed.  For  example, one Chief of Payroll told us that because they were understaffed,  the current staff worked 12 to 14 hours a day and still had backlogs of pay  start transactions to be processed.
section_title: Training on Pay Entitlements and Processing Requirements Critical
paragraphs: We identified instances in which the personnel at military pay offices at  both the USPFOs and the active Army finance offices did not appear to be  knowledgeable about the various aspects of the extensive pay eligibility or  payroll processing requirements. There are no DOD or Army requirements  for military pay personnel to receive training on pay entitlements and  processing requirements associated with mobilized Army Guard soldiers or  for monitoring the extent to which personnel have taken either of the  recently established training courses in the area.  Such training is critical  given that military pay personnel must be knowledgeable with respect to  the existing extensive and complex pay eligibility and processing  requirements.  We also found that such training is particularly important for  active Army pay personnel who may lack knowledge in the unique  procedures and pay transaction entry requirements to pay Army Guard  soldiers. As a result, we identified numerous instances in which military  pay technicians at both the USPFOs and active Army finance office  locations made data coding errors when entering transaction codes into the  pay systems. Correcting these erroneous transactions required additional  labor-intensive research and data entry by other more skilled pay  technicians.
While the Army Guard began offering training for their military pay  technicians in fiscal year 2002, we found that there was no overall  monitoring of training the Army Guard pay personnel had taken and no  requirement for USPFO pay technicians to attend these training courses.   At several of the case study locations we audited, we found that Army  Guard pay technicians relied primarily on on-the-job-training and phone  calls to the Army Guard Financial Services Center in Indianapolis or to  other military pay technicians at other locations to determine how to  process active duty pays.
In addition, unit commanders have significant responsibilities for  establishing and maintaining the accuracy of soldiers’ pay records.  U.S.  Army Forces Command Regulation 500-3-3, Reserve Component Unit  Commander’s Handbook (July 15, 1999), requires unit commanders to   (1) annually review and update pay records for all soldiers under their  command as part of an annual soldier readiness review and (2) obtain and  submit supporting documentation needed to start entitled active duty pay  and allowances based on mobilization orders.  However, we saw little  evidence that commanders for our case study units carried out these  requirements.  We were told that this was primarily because unit  commanders have many administrative duties and without additional  training on the importance of these actions, they may not receive sufficient  priority attention.
The lack of unit commander training on the importance of these  requirements may have contributed to pay problems we identified at our  case study units.   For example, at our Virginia case study location, we  found that when the unit was first mobilized, USPFO pay personnel were  required to spend considerable time and effort to correct hundreds of  errors in the unit’s pay records dating back to 1996.  Such errors could have  been identified and corrected during the preceding years’ readiness  reviews.  Further, we observed many cases in which active duty pays were  not started until more than 30 days after the entitled start date because  soldiers did not submit the paperwork necessary to start these pays.
section_title: Customer Service Concerns
paragraphs: We found indications that many Army Guard soldiers were displeased with  the customer service they received.  None of the DOD, Army, or Army  Guard policies and procedures we examined addressed the level or quality  of customer service that mobilized Army Guard soldiers should receive  concerning questions or problems with their active duty pays. We found  that not all Army Guard soldiers and their families were informed at the  beginning of their mobilization of the pays and allowances they should  receive while on active duty.  This information is critical to enable soldiers  to determine if they were not receiving such pays and therefore require  customer service.  We also found that the documentation provided to Army  Guard soldiers—primarily in the form of leave and earnings statements— concerning the pays and allowances they received did not facilitate  customer service.
Consistent with the confusion we found among Army Guard and active  Army finance components concerning responsibility for processing pay  transactions for mobilized Army Guard soldiers, we found indications that  the soldiers themselves were similarly confused.  Many of the complaints  we identified concerned confusion over whether mobilized Army Guard  personnel should be serviced by the USPFO because they were Army  Guard soldiers or by the active Army because they were mobilized to  federal service.
Individual Case Illustration:  Poor Customer Service One soldier told us that he submitted documentation on three separate occasions to  support the housing allowance he should have received as of the beginning of his  October 2001 mobilization.  Each time he was told to resubmit the documentation  because his previously submitted documents were lost.  Subsequently, while he was  deployed, he made additional repeated inquiries as to when he would receive his  housing allowance pay.  He was told that it would be taken care of when he returned  from his deployment.  However, when he returned from his deployment, he was told that  he should have taken care of this issue while he was deployed and that it was now too  late to receive this allowance.
Data collected from Army Guard units mobilized to active duty indicated  that some members of the units had concerns with the pay support  customer service they received associated with their mobilization— particularly with respect to pay issues associated with their demobilization.   Specifically, of the 43 soldiers responding to our question on satisfaction  with customer support at mobilization, 10 indicated satisfaction, while 15  reported dissatisfaction.  Similarly, of the 45 soldiers responding to our  question on customer support following demobilization, 5 indicated  satisfaction while 29 indicated dissatisfaction.  Of the soldiers who  provided written comments about customer service, none provided any  positive comments about the customer service they received, and several  had negative comments about the customer service they received,  including such comments as “non-existent,” “hostile,” or “poor.”    A  company commander for one of our case study units characterized the  customer service his unit received at initial mobilization as time-consuming  and frustrating.
In addition, procedures used to notify soldiers of large payroll-related debts  did not facilitate customer service.  Under current procedures, if a soldier  is determined to owe the government money while on active duty, he is  assessed a debt and informed of this assessment with a notation for an  “Unpaid Debt Balance” in the remarks section of his leave and earnings  statement. One such assessment showing a $39,489.28 debt is shown in  figure 1.
section_title: Systems Problems
paragraphs: Several systems issues were significant factors impeding accurate and  timely payroll payments to mobilized Army Guard soldiers, including    the lack of an integrated or effectively interfaced pay system with both  the personnel and order-writing systems;  limitations in DJMS-RC processing capabilities; and  ineffective system edits for large payments and debts.
Our systems findings were consistent with issues raised by DOD in its June  2002 report to the Congress on its efforts to implement an integrated  military pay and personnel system.  Specifically, DOD’s report  acknowledged that major deficiencies with the delivery of military  personnel and pay services were the direct result of the inability of a  myriad of current systems with multiple, complex interfaces to fully  support current business process requirements. DOD has a significant  system enhancement project underway, but it is likely that the department  will operate with many of its existing system constraints for a number of  years.
Figure 2 provides an overview of the five systems currently involved in  processing Army Guard pay and personnel information.
The five key DOD systems (see fig. 4) involved in authorizing, entering,  processing, and paying mobilized Army Guard soldiers were not integrated.   Lacking either an integrated or effectively interfaced set of personnel and  pay systems, DOD must rely on manual entry of data from the same source  documents into multiple systems. This error-prone, labor-intensive manual  data entry caused various pay problems—particularly late payments.
In our case studies, we found instances in which mobilization order data  that were entered into SIDPERS were either not entered into DJMS-RC for  several months after the personnel action or were entered inconsistently.   Consequently, these soldiers either received active duty pays they were not  entitled to receive—some for several months—or did not timely receive  active duty pays to which they were entitled.
Individual Case Illustration:  Overpayment due to Lack of Integrated Pay and  Personnel Systems A soldier with the Mississippi Army National Guard was mobilized in January 2002 with  his unit and traveled to the mobilization station at Fort Campbell.  The unit stayed at Fort  Campbell to perform post security duties until June 2002.  On June 14, 2002, the E-4  specialist received a "general" discharge order from the personnel office at Fort  Campbell for a drug-related offense.  However, he continued to receive active duty pay,  totaling approximately $9,400, until September 2002.  Although the discharge  information was promptly entered into the soldier's personnel records, it was not entered  into the pay system for almost 4 months.  This problem was caused by weaknesses in  the processes designed to work around the lack of integrated pay and personnel  systems.  Further, the problem was not detected because reconciliations of pay and  personnel data were not performed timely.  Specifically, it was not until over 3 months  after the soldier's discharge, through its September 2002 end-of-month reconciliation,  that the Mississippi Army National Guard USPFO identified the overpayment and took  action on October 2, 2002, to stop the individual's pay.  However, collection efforts on the  $9,400 overpayment did not begin until July 2003, when we pointed out this situation to  USPFO officials.
A soldier with the Mississippi Army National Guard was mobilized in  January 2002 with his unit and traveled to the mobilization station at Ft.  Campbell.  The unit stayed at Ft. Campbell to perform post security duties  until June 2002.  On June 14, 2002, the E-4 specialist received a “general”  discharge order from the personnel office at Ft. Campbell for a drug-related  offense.  However, he continued to receive active duty pay, totaling  approximately $9,400, until September 2002.  Although the discharge  information was promptly entered into the soldier’s personnel records, it  was not entered into the pay system for almost 4 months.  This problem  was caused by weaknesses in the processes designed to work around the  lack of integrated pay and personnel systems.  Further, the problem was  not detected because reconciliations of pay and personnel data were not  performed timely.  Specifically, it was not until over 3 months after the  soldier’s discharge, through its September 2002 end-of-month  reconciliation, that the Mississippi Army National Guard USPFO identified  the overpayment and took action on October 2, 2002, to stop the  individual’s pay.  However, collection efforts on the $9,400 overpayment did  not begin until July 2003, when we pointed out this situation to USPFO  officials.
subsections: section_title: Pay System Has Limited Active Duty Pay Processing Capabilities
paragraphs: DOD has acknowledged that DJMS-RC was not designed to process payroll  payments to mobilized Army Guard soldiers for extended periods of active  duty.  Consequently, it is not surprising that we found a number of  “workarounds”—procedures intended to compensate for existing DJMS- RC processing limitations with respect to Army Guard active duty pays.   Such manual workarounds are inefficient and create additional labor- intensive, error-prone transaction processing.
Because of limited DJMS-RC processing capabilities, the Army Guard  USPFO and in-theatre active Army area servicing finance office pay  technicians are required to manually enter transactions for nonautomated  pay and allowances every month.  DJMS-RC was originally designed to  process payroll payments to Army Reserve and Army Guard personnel on  weekend drills, or on short periods of annual active duty (periods of less  than 30 days in duration) or for training. With Army Guard personnel now  being paid from DJMS-RC for extended periods of active duty (as long as 2  years at a time), DFAS officials told us that the COBOL/mainframe-based  system was now being stretched to the limits of its functionality.  In several  of the case study units we audited, we found a number of instances in  which soldiers were underpaid their entitled pays that must be entered  each month manually (such as foreign language proficiency, special duty  assignment, or hardship duty pays) because pay technicians did not enter  the monthly manual transaction input required to initiate those pays every  month.
In addition, we found a significant number of soldiers were overpaid when  they were demobilized from active duty before the stop date specified in  their original mobilization orders.  This occurred because pay technicians  did not update the stop date in DJMS-RC necessary to terminate the  automated active duty pays when soldiers leave active duty early.  For  example, the military finance office in Kuwait, responsible for paying  Virginia 20th Special Forces soldiers in the fall of 2002, did not stop hostile  fire and hardship duty pays as required when these soldiers left  Afghanistan in October 2002.  We found that 55 of 64 soldiers eligible for  hostile fire pay were overpaid for at least 1 month beyond their departure  from Afghanistan.
Further, these month-to-month pays and allowances were not separately  itemized on the soldiers’ leave and earnings statements in a user-friendly  format.  Instead, many of these pays appeared as lump sum payments  under “other credits.”  In many cases these “other credit” pay and  allowances appeared with little explanation.  As a result, we found  indications that Army Guard soldiers had difficulty using the leave and  earnings statements to determine if they received all entitled active duty  pays and allowances.  Without such basic customer service, the soldiers  cannot readily determine whether they received all entitled active duty  pays and allowances.
As shown in the example leave and earnings statement extract included in  figure 3, an Army Guard soldier who received a series of corrections to  special duty assignment pay along with their current special duty  assignment payment of $110 is likely to have difficulty discerning whether  he or she received all and only entitled active duty pays and allowances.
In yet another example, one sergeant, apparently having difficulty  deciphering his leave and earnings statement, wrote a letter to a fellow  service member asking, “Are they really fixing pay issues or are they  putting them off till we return?  If they are waiting, then what happens to  those who (god forbid) don’t make it back?”  This sergeant was killed in  action in Afghanistan on April 15, 2002, before he knew if his pay problems  were resolved.
section_title: System Edits Do Not Prevent Large Payments or Debts
paragraphs: While DJMS-RC has several effective edits to prevent certain  overpayments, it lacks effective edits to reject large proposed net pays over  $4,000 at midmonth and over $7,000 at end of month before their final  processing.  We found several instances in our case studies where soldiers  received large lump sum payments, possibly related to previous  underpayments or other pay errors, with no explanation.  Further, the lack  of preventive controls over large payments poses an increased risk of  fraudulent payments.
Individual Case Illustration: System Edits Do Not Prevent Large Payments and  Debts  A sergeant with the Colorado Army National Guard, Special Forces, encountered  numerous severe pay problems associated with his mobilization to active duty, including  his deployment to Afghanistan in support of Operation Enduring Freedom. The  sergeant’s active duty pay and other pay and allowances should have been stopped on  December 4, 2002, when he was released from active duty. However, because the  sergeant’s mobilization orders called him to active duty for 730 days and not the 365  days that he was actually mobilized, and the Army area servicing finance office at the  demobilization station, Fort Campbell, did not enter the release from active duty date  into DJMS-RC, the sergeant continued to improperly receive payments, as if he were still  on active duty, for 2 and a half months after he was released from active duty totaling  over $8,000. The sergeant was one of 34 soldiers in the company whose pay continued  after their release from active duty. In an attempt to stop the erroneous payments, in  February 2003, pay personnel at the Colorado USPFO created a transaction to cancel  the tour instead of processing an adjustment to amend the stop date consistent with the  date on the Release from Active Duty Order. When this occurred, DJMS-RC  automatically processed a reversal of 11 months of the sergeant’s pay and allowances  that he earned while mobilized from March 1, 2002, through February 4, 2003, which  created a debt in the amount of $39,699 on the soldier’s pay record; however, the  reversal should have only been from December 5, 2002, through February 4, 2003. In  April 2003, at our request, DFAS-Indianapolis personnel intervened in an attempt to  correct the large debt and to determine the actual amount the sergeant owed. In May  2003, DFAS-Indianapolis erroneously processed a payment transaction instead of a debt  correction transaction in DJMS-RC. This created a payment of $20,111, which was  electronically deposited to the sergeant’s bank account without explanation, while a debt  of $30,454 still appeared on his Leave and Earnings Statement. About 9 months after  his demobilization, the sergeant’s unpaid debt balance was reportedly $26,559, but the  actual amount of his debt had not yet been determined as of September 2003.
DOD has a system enhancement project underway for which one of the  major expected benefits is the improvement of military pay accuracy and  timeliness.  However, the effort to replace over 80 legacy personnel, pay,  training, and manpower systems (including DJMS-RC) has been underway  for over 5 years and DOD has encountered challenges fielding the system.   In the nearer term, the department reported that it expected to field a  system to replace the current DFAS system used to process pays to  mobilized Army Guard soldiers by March 2005.  However, given that the pay  system is only one of several non-integrated systems the department  currently relies on to authorize and pay mobilized Army Guard soldiers, it  is likely that the department will continue to operate with many of the  existing system constraints for at least several more years.
section_title: Actions to Improve Accuracy and Timeliness of Army Guard Pay
paragraphs: While it is likely that DOD will be required to rely on existing systems for a  number of years, a complete and lasting solution to the pay problems we  identified will only be achieved through a complete reengineering, not only  of the automated systems, but also of the supporting processes and human  capital practices in this area.  However, our related report (GAO-04-89)  detailed immediate actions that can be taken in these areas to improve the  timeliness and accuracy of pay and allowance payments to activated Army  Guard soldiers.  The need for such actions is increasingly imperative in  light of the current extended deployment of Army Guard soldiers in their  crucial role in Operation Iraqi Freedom and anticipated additional  mobilizations in support of this operation.  To help ensure that the Army  Guard can continue to successfully fulfill its vital role in our national  defense, immediate steps are needed to at least mitigate the most serious  problems we identified.
Accordingly, we made the following short-term recommendations to the  Secretary of Defense to address the issues we identified with respect to the  existing processes, human capital, and automated systems relied on to pay  activated Army Guard personnel.
section_title: Process
paragraphs: Establish a unified set of policies and procedures for all Army Guard,  Army, and DFAS personnel to follow for ensuring active duty pays for  Army Guard personnel mobilized to active duty.
Establish performance measures for obtaining supporting  documentation and processing pay transactions (for example, no more  than 5 days would seem reasonable).
Establish who is accountable for stopping active duty pays for soldiers  who return home earlier than their units.
Clarify the policies and procedures for how to properly amend active  duty orders, including medical extensions.
Require Army Guard commands and unit commanders to carry out  complete monthly pay and personnel records reconciliations and take  necessary actions to correct any pay and personnel record mismatches  found each month.
Update policies and procedures to reflect current legal and DOD  administrative requirements with respect to active duty pays and  allowances and transaction processing requirements for mobilized  Army Guard soldiers.
section_title: Human Capital
paragraphs: Consider expanding the scope of the existing memorandum of  understanding between DFAS and the Army concerning the provision of  resources to support surge processing at mobilization and  demobilization sites to include providing additional resources to  support surge processing for pay start and stop transaction  requirements at Army Guard home stations during initial soldier  readiness programs.
Determine whether issues concerning resource allocations for the  military pay operations identified at our case study units exist at all 54  USPFOs, and if so, take appropriate actions to address these issues.
Determine whether issues concerning relatively low-graded military pay  technicians identified at our case study units exist at all 54 USPFOs, and  if so, take appropriate actions to address these issues.
Modify existing training policies and procedures to require all USPFO  and active Army pay and finance personnel responsible for entering pay  transactions for mobilized Army Guard soldiers to receive appropriate  training upon assuming such duties.
Require unit commanders to receive training on the importance of  adhering to requirements to conduct annual pay support documentation  reviews and carry out monthly reconciliations.
Establish an ongoing mechanism to monitor the quality and completion  of training for both pay and finance personnel and unit commanders.
Identify and evaluate options for improving customer service provided  to mobilized Army Guard soldiers by providing improved procedures for  informing soldiers of their pay and allowance entitlements throughout  their active duty mobilizations.
Identify and evaluate options for improving customer service provided  to mobilized Army Guard soldiers to ensure a single, well-advertised  source for soldiers and their families to access for customer service for  any pay problems.
Review the pay problems we identified at our six case study units to  identify and resolve any outstanding pay issues for the affected soldiers.
section_title: Systems
paragraphs: Evaluate the feasibility of using the personnel-to-pay interface as a  means to proactively alert pay personnel of actions needed to start  entitled active duty pays and allowances.
Evaluate the feasibility of automating some or all of the current manual  monthly pays, including special duty assignment pay, foreign language  proficiency pay, hardship duty pay, and HALO pay.
Evaluate the feasibility of eliminating the use of the “other credits” for  processing hardship duty (designated areas), HALO pay, and special  duty assignment pay, and instead establish a separate component of pay  for each type of pay.
Evaluate the feasibility of using the JUSTIS warning screen to help  eliminate inadvertent omissions of required monthly manual pay inputs.
Evaluate the feasibility of redesigning Leave and Earnings Statements to  provide soldiers with a clear explanation of all pay and allowances  received so that they can readily determine if they received all and only  entitled pays.
Evaluate the feasibility of establishing an edit check and requiring  approval before processing any debt assessments above a specified  dollar amount.
Evaluate the feasibility of establishing an edit check and requiring  approval before processing any payments above a specified dollar  amount.
With regard to a complete and lasting solution to the pay problems we  identified, our related report included the following long-term  recommendations   As part of the effort currently under way to reform DOD’s pay and  personnel systems—referred to as DIMHRS—incorporate a complete  understanding of the Army Guard pay problems as documented in this  report into the requirements development for this system.
In developing DIMHRS, consider a complete reengineering of the  processes and controls and ensure that this reengineering effort deals  not only with the systems aspect of the problems we identified, but also  with the human capital and process aspects.
section_title: Concluding Comments
paragraphs: The extensive problems we identified at the case study units vividly  demonstrate that the controls currently relied on to pay mobilized Army  Guard personnel are not working and cannot provide reasonable assurance  that such pays are accurate or timely.  The personal toll that these pay  problems have had on mobilized soldiers and their families cannot be  readily measured, but at least with two of our case study units there are  already indications that these pay problems have begun to have an adverse  effect on reenlistment and retention.  It is not surprising that cumbersome  and complex processes and ineffective human capital strategies, combined  with the use of a system that was not designed to handle the intricacies of  active duty pay and allowances, would result in significant pay problems.   To its credit, DOD concurred with the recommendations included in our  companion report and outlined some actions already taken, others that are  underway, and further planned actions with respect to our  recommendations.
We did not assess the completeness and adequacy of DOD’s actions  directed at improving controls over pays to mobilized Army Guard soldiers.   However, pays to mobilized Army Reserve soldiers rely on many of the  same processes and automated systems used to pay mobilized Army Guard  soldiers.  At your request, we will be reviewing the pay experiences of  mobilized Army Reserve soldiers, and we will be assessing the  effectiveness of any relevant DOD actions taken as part of that review.
Finally, I commend the Chairman and Vice Chairman for holding an  oversight hearing on this important issue.  Your Committee’s continuing  interest and diligence in overseeing efforts to effectively and efficiently  support our Army Guard and Reserve forces will be essential in bringing  about comprehensive and lasting improvements to many decades-old,  entrenched problems. For example, in addition to our ongoing review of  the pay experiences of mobilized Army Reserve soldiers, we now have  related engagements ongoing that you requested concerning  controls over pays and related medical benefits for mobilized Army  Guard soldiers who elect to have their active duty tours extended to  address injuries or illnesses incurred while on active duty,  controls over travel reimbursements to mobilized Army Guard soldiers,  utilization of Army Guard forces since September 11, 2001, and  the impact of deployments on DOD’s ability to carry out homeland  security missions.
We are committed to continuing to work with you and DOD to identify and  monitor actions needed to bring about comprehensive and lasting solutions  to long-standing problems in its business and financial management  operations.
Mr. Chairman, this concludes my statement.  I would be pleased to answer  any questions you or other members of the Committee may have at this  time.
subsections: section_title: Contacts and Acknowledgments
paragraphs: For further information about this testimony, please contact Gregory D.  Kutz at (202) 512-9095 or kutzg@gao.gov.  Individuals making key  contributions to this testimony include Paul S. Begnaud, Amy C. Chang,  Mary Ellen Chervenic, Francine M. DelVecchio, Dennis B. Fauber, Geoffrey  B. Frank, Jennifer L. Hall, Charles R. Hodge, Julia C. Matta, Jonathan T.  Meyer, Sheila D. Miller, and John J. Ryan, Patrick S. Tobo.
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