Improving the Productivity of Federal Payment Centers Could Save Millions

FGMSD-80-13: Published: Feb 12, 1980. Publicly Released: Feb 12, 1980.

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Inefficiencies in processing payments to vendors for goods and services cost the Federal Government millions annually. For example, productivity rates achieved by Federal payment centers in the vendor bill-payment function varied by about 600 percent. Although the bill-payment function is a readily measurable, repetitive process, most payment centers GAO examined did not have productivity measures. Thus, GAO constructed many of the measures on which the performance data were based. GAO determined three primary reasons for the large variance: (1) the degree of management concern for, and use of efficiency measures; (2) the volume of workload processed by the centers; and (3) the degree to which automation or improved processes and procedures were used in the payment process.

According to payment center managers, the major cause of low productivity was the disincentive to be efficient. These disincentives included: (1) across-the-board budget cuts, which encouraged managers to keep staff above minimum levels in order to absorb the cuts and still perform the work; (2) tying grade levels to number of staff supervised; and (3) inability of managers to discipline employees who do not perform. Alternatively, the managers of payment centers with high productivity showed a high degree of concern about productivity and had reasonably good systems designed to identify expected performance and measure against it. However, one nonprocedural factor that affected productivity was workload volume. Payment centers with large workloads normally achieved higher productivity rates than centers with low volumes. High volume allowed economies of scale and assembly-line techniques to be used. Just as automation and statistical sampling contributed to high productivity rates, duplication of effort, problems in timely submission of receiving reports and limited sharing of knowledge on processing rates and methods used to improve efficiency contributed to the low processing rates. Newly enacted legislation should help make managers more acutely aware of the need for emphasizing productivity. However, GAO does not feel that legislation alone would result in a significant increase in productivity measurement. The Office of Personnel Management needs to take an active role in supporting productivity measurements.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The heads of individual departments and agencies should carefully evaluate the structure, processes, and procedures for their bill-paying activities. To improve productivity they should: (1) eliminate or consolidate payment centers which, due to low volume, cannot be made efficient; (2) use statistical sampling techniques in auditing payment transactions in accord with GAO requirements; (3) use alternatives to receiving reports such as fast-pay procedures, where possible; (4) analyze the processes and procedures used in examining payment transactions to identify and eliminate unnecessary or redundant steps; and (5) initiate periodic exchange of information on methods and procedures between payment centers that are within the same agency and with other agencies. In addition, for payment centers and related financial management functions, the Joint Financial Management Improvement Program has a role which the Office of Personnel Management should consider drawing upon. GAO further recommends that the Executive Director, Joint Financial Management Improvement Program, request that agencies report the progress made in measuring and improving productivity within their payment centers as part of the agency's annual financial management improvement report.

    Agency Affected: Heads of Federal Agencies


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