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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) plan to consolidate over 300 defense accounting offices into 5 large existing finance centers and 20 new sites during the next 7 years, focusing on: (1) the process DOD used to identify the number and locations of the new operating centers; (2) the consolidation's potential impact on customer service; and (3) DOD plans to include commercial business practices in the consolidation.

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Matter for Congressional Consideration

Matter Status Comments
Before approving military construction funds for renovating excess facilities for finance and accounting operations, Congress may want to ensure that DOD has adequately assessed and justified the size and locations of its finance and accounting network.
Closed - Implemented
The Fiscal Year 1996 Defense Authorization Act included a requirement that DOD study its requirements for additional operating locations and, before opening additional locations, provide Congress with specific justification. DOD delayed its decisions to open three of the five unneeded operating locations and indicated it would provide Congress with the required information if it decided to open them. DOD later decided to open one additional location. By not opening the remaining 2 sites, DOD avoided spending about $22 million in military construction funds.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. The Secretary of Defense should direct the DOD Comptroller to develop an updated estimate of the number of locations and personnel required to perform finance and accounting functions. In developing this estimate, it is important that the Comptroller consider not only today's concept of operations but also how finance and accounting operations will be performed once the Defense Finance and Accounting Service (DFAS) has complied with DOD business process reengineering goals and directives.
Closed - Implemented
On January 2, 1996, DFAS completed a reevaluation of the number of locations and personnel needed to perform finance and accounting functions. The reevaluation concluded that DOD did not need 5 of the 21 planned locations.
Department of Defense 2. The Secretary of Defense should direct the DOD Comptroller to use the updated information to reassess the site selection decisions for new operating locations. This reassessment should balance DOD desire for short-term cost savings with the need to select sites that, from a business perspective, offer the greatest opportunity for maintaining or enhancing finance and accounting operations and services to Defense Finance and Accounting Service customers.
Closed - Implemented
Although DOD concluded that it did not need 5 of the 21 planned operating locations, DOD decided that Congress intended for it to open 2 of the 5 operating locations in question, and has proceeded to do so. It delayed final decisions on the remaining three sites. These decisions will be made during fiscal years 1997 and 1999.

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