Internal Controls: Controls Over Expedited Payments to Defense Suppliers Need Improvement
NSIAD-88-113
Published: Feb 29, 1988. Publicly Released: Apr 01, 1988.
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Highlights
In response to a congressional request, GAO: (1) reviewed the Defense Logistics Agency's (DLA) implementation of the Office of Management and Budget's (OMB) fast pay program revisions; and (2) evaluated the effectiveness of DLA internal control procedures to ensure receipt of items purchased under the program.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Defense Logistics Agency | The Director, DLA, should conform to provisions of OMB Circular A-125 by: (1) discontinuing use of fast-pay procedures for payment of supplies sent to depots; and (2) reviewing and approving fast-pay contracts awarded in excess of the $25,000 limitation specified by OMB. |
Closed – Implemented
DLA has discontinued the use of fast pay for routine depot shipments and reviewed and approved fast-pay contracts awarded in excess of $25,000.
|
| Defense Logistics Agency | The Director, DLA, should improve controls over fast-pay procurements by: (1) establishing interim measures to match receiving reports to payment records for direct vendor deliveries to overseas customers until the automated receipt confirmation process is established so that vendors can be notified of nonreceipt within prescribed time frames; and (2) ensuring that current problem vendors do not receive fast-pay contract awards. |
Closed – Implemented
A Department of Defense (DOD) policy on this issue was established on October 6, 1987. DLA assured agencywide compliance with this policy by December 31, 1988. Also, problem vendors were identified to ensure that problem vendors do not receive fast-pay contracts.
|
| Defense Logistics Agency | The Director, DLA, should require the Commander, DPSC, to collect outstanding claims against contractors for materials previously paid for and not received. |
Closed – Implemented
Collection has been made of all outstanding claims of $6.7 million. This recommendation has been fully implemented.
|
| Defense Logistics Agency | The Director, DLA, should again identify this area as a material weakness in the fiscal year 1988 internal controls annual assessment and discuss corrective actions planned. |
Closed – Implemented
DLA has identified and reported this as a material weakness and will continue to report it until it is assured that the problem has been corrected.
|
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Topics
Accounting proceduresBilling proceduresContractor paymentsDefense procurementInformation systemsInternal controlsMilitary materielNoncomplianceProgram managementAir Force purchasing