Defense steps up efforts to recover overpayments

The Defense Department is stepping up its efforts to collect hundreds of millions of dollars in overpayments made to contractors, an agency official said Friday. JoAnn Boutelle, director of commercial pay services at the Defense Finance and Accounting Service (DFAS), said the agency has already put in place several recommendations from the General Accounting Office to improve its debt management. "We've recently implemented a new contract debt tracking system, which flags overdue debts for transfer to the Treasury Department," Boutelle said. The Debt Management Office at DFAS handles debts over $600 that are owed by contractors who have been unresponsive to requests for payment. A June GAO report criticized DFAS for not using checklists to distinguish between real debts and ones that had already been paid, failing to promptly issue notification letters to contractors, and failing to communicate directly with contractors to resolve debts. The watchdog agency also found that DFAS did not take advantage of Treasury's centralized debt collection programs to recover debt or use the Defense Criminal Investigative Service to pursue potential fraud. "Ineffective and insufficient efforts by the office are the results of both deficiencies in and lack of adherence to policies and procedures," said the report, "Debt Collection: Defense Finance and Accounting Service Needs to Improve Collection Efforts (GAO-01-686). According to a March GAO report, overpayments to contractors frequently occur when discrepancies arise between the actual costs incurred during a project and the original cost estimate. Contracting officers must monitor project progress and take action if progress lags behind payments, adjusting liquidation rates accordingly. The contracting officer is responsible for ensuring the government receives a refund when there is a change in the project schedule or the quantity of items delivered by the contractor. GAO recommended that DFAS establish internal controls to validate debts, including holding backup documentation in each debt file, establishing time frames for sending letters to contractors and communicating directly with contractors. GAO also suggested that DFAS improve its timeliness in referring debts to Treasury and seek help from the Justice Department when debts involve illegal activities. "The improved procedures for issuing demand letters and controlling the debt cases will allow the agency to resolve the issues identified in the report," Boutelle said. DFAS has incorporated all of GAO's recommendations so far except the suggestion regarding debt referral to Treasury. DFAS said it plans to implement that recommendation by the end of August.

Overpayments to contractors are a longstanding problem for the Defense Department. From 1994 to 1999, Defense contractors returned nearly $1.2 billion in overpayments to the department. As of September 2000, contractors still owed Defense nearly $750 million.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.