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DOD Contract Management: Greater Attention Needed to Identify and Recover Overpayments

NSIAD-99-131 Published: Jul 19, 1999. Publicly Released: Aug 02, 1999.
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Highlights

Pursuant to a congressional request, GAO updated its previous report on the Department of Defense's (DOD) overpayments to contractors and subsequent refunds to the Defense Finance Accounting Service (DFAS), focusing on: (1) DOD's efforts to identify and recover overpayments made through fiscal year (FY) 1998; and (2) whether 13 contractors were retaining overpayments and how quickly overpayments were refunded.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense The Secretary of Defense should require contractors to promptly notify the government of overpayments made to them.
Closed – Implemented
A FAR change implementing this change has been approved for publication in Federal Acquisition Ciruclar 2001-3.
Department of Defense The Secretary of Defense should direct the Director, DFAS, and the Commander, Defense Contract Management Command, to reemphasize the need to request refunds of overpayments promptly and to perform timely reconciliations.
Closed – Implemented
The Deputy Director, DFAS, issued a memorandum on January 13, 2000, emphasizing the need to perform timely reconciliations and promptly collect identified overpayments.
Department of Defense The Secretary of Defense should direct the Director, DFAS, to examine the cost-effectiveness of requiring contractors to periodically provide a status of their accounts with the government.
Closed – Implemented
DFAS completed its review of the cost-effectiveness of requiring contractors to periodically provide a status of their accounts with the government. DFAS concluded it would not be cost effective because implementation would entail annual auditing of contractor status.

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Topics

AccountabilityContract oversightContractor paymentsDefense procurementDepartment of Defense contractorsFederal agency accounting systemsFinancial managementInternal controlsOverpaymentsRefunds to government