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entitled 'Military Pay: Army Reserve Soldiers Mobilized to Active Duty 
Experienced Significant Pay Problems' which was released on August 20, 
2004.

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Report to Congressional Requesters: 

August 2004: 

MILITARY PAY: 

Army Reserve Soldiers Mobilized to Active Duty Experienced Significant 
Pay Problems: 

GAO-04-911: 

GAO Highlights: 

Highlights of GAO-04-911, a report to congressional requesters 

Why GAO Did This Study: 

In light of GAO’s November 2003 report highlighting significant pay 
problems experienced by Army National Guard soldiers mobilized to 
active duty in support of the global war on terrorism and homeland 
security, GAO was asked to determine if controls used to pay mobilized 
Army Reserve soldiers provided assurance that such payments are 
accurate and timely. GAO’s audit used a case study approach to focus 
on controls over three key areas: processes, people (human capital), 
and automated systems. 

What GAO Found: 

The processes and automated systems relied on to provide active duty 
pays, allowances, and tax benefits to mobilized Army Reserve soldiers 
are so error-prone, cumbersome, and complex that neither DOD nor, more 
importantly, Army Reserve soldiers themselves, could be reasonably 
assured of timely and accurate payments. Weaknesses in these areas 
resulted in pay problems, including overpayments, and to a lesser 
extent, late and underpayments, of soldiers’ active duty pays and 
allowances at eight Army Reserve case study units. Specifically, 332 
of 348 soldiers (95 percent) we audited at eight case study units that 
were mobilized, deployed, and demobilized at some time during the 18-
month period from August 2002 through January 2004 had at least one 
pay problem. 

Pay Experiences at Eight Army Reserve Case Study Units: 

[See PDF for image]

[End of figure]

Many of the soldiers had multiple problems associated with their 
active duty pays and allowances. Some of these problems lingered 
unresolved for considerable lengths of time, some for over 1 year. 
Further, nearly all soldiers began receiving their tax exemption 
benefit at least 1 month late. These pay problems often had a profound 
adverse impact on individual soldiers and their families. For example, 
soldiers were required to spend considerable time, sometimes while 
deployed in remote, hostile environments overseas, seeking help on pay 
inquiries or in correcting errors in their active duty pays, 
allowances, and related tax benefits. 

The processes in place to pay mobilized Army Reserve soldiers, 
involving potentially hundreds of DOD, Army, and Army Reserve 
organizations and thousands of personnel, were deficient with respect 
to (1) tracking soldiers’ pay status as they transition through their 
active duty tours, (2) carrying out soldier readiness reviews, (3) 
after-the-fact report reconciliation requirements, and (4) unclear 
procedures for applying certain pay entitlements. With respect to 
human capital, weaknesses identified at our case study units included 
(1) insufficient resources allocated to key unit-level pay 
administration responsibilities, (2) inadequate training related to 
existing policies and procedures, and (3) poor customer service. 
Several automated systems issues also contributed to the significant 
pay errors, including nonintegrated systems and limited processing 
capabilities.

What GAO Recommends: 

GAO is reiterating 5 previous recommendations that remain open, 
including action to ensure that longer-term system improvement actions 
include a complete reengineering of not only related automated systems, 
but also supporting processes and human capital practices. GAO’s report 
includes 15 new recommendations. Fourteen recommendations are directed 
at immediate actions needed to address weaknesses in the processes, 
human capital, and automated systems currently relied on to provide 
active duty pays, allowances, and related tax benefits to mobilized 
Army Reserve soldiers. GAO’s other longer-term recommendation is 
directed at action needed to ensure that planned automated systems 
address the issues identified in this report. DOD agreed with GAO’s 
recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-911.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gregory D. Kutz at (202) 
512-9095 or Kutzg@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Case Studies Illustrate Pay Problems: 

Significant Weaknesses Exist in Mobilized Army Reserve Pay Processes: 

Human Capital Issues Affect Pay Accuracy and Timeliness: 

Automated Systems Deficiencies Constrain Accurate and Timely Payments: 

Recent Actions Should Result in Improvements: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: 824th Quartermaster Company, Fort Bragg, North Carolina: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix III: 965th Dental Company Seagoville, Texas: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix IV: 948th Forward Surgical Team, Southfield, Michigan: 

Mobilization Pay Problems: 

Deployment Pay Problems: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix V: 443rd Military Police Company, Owings Mills, Maryland: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix VI: FORSCOM Support Unit, Finksburg, Maryland: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix VII: 629th Transportation Detachment, Fort Eustis, Virginia: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix VIII: 3423rd Military Intelligence Detachment New Haven, 
Connecticut: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix IX: 431st Chemical Detachment Johnstown, Pennsylvania: 

Mobilization Pay Problems: 

Pay Problems While Deployed: 

Pay Problems Associated with Demobilization and Release from Active 
Duty: 

Appendix X: Comments from the Department of Defense: 

Appendix XI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Acknowledgments: 

Tables: 

Table 1: Active Duty Pays and Allowances Associated with Case Study 
Units: 

Table 2: Army Reserve Units Audited: 

Table 3: Pay Problems at Eight Case Study Units: 

Table 4: Pay Problems by Phase: 

Table 5: Mobilization Pay Problems: 

Table 6: Deployment Pay Problems: 

Table 7: Demobilization Pay Problems: 

Table 8: Pay Problems by Phase: 

Table 9: Mobilization Pay Problems: 

Table 10: Deployment Pay Problems: 

Table 11: Demobilization Pay Problems: 

Table 12: Pay Problems by Phase: 

Table 13: Mobilization Pay Problems: 

Table 14: Deployment Pay Problems: 

Table 15: Demobilization Pay Problems: 

Table 16: Pay Problems by Phase: 

Table 17: Mobilization Pay Problems: 

Table 18: Deployment Pay Problems: 

Table 19: Demobilization Pay Problems: 

Table 20: Pay Problems by Phase: 

Table 21: Deployment Pay Problem: 

Table 22: Demobilization Pay Problems: 

Table 23: Timetable of Soldier's Attempts to Correct Problems Related 
to Active Duty Entitlements: 

Table 24: Pay Problems by Phase: 

Table 25: Mobilization Pay Problems: 

Table 26: Deployed Pay Problems: 

Table 27: Demobilization Pay Problems: 

Table 28: Pay Problems by Phase: 

Table 29: Mobilization Pay Problems: 

Table 30: Deployment Pay Problems: 

Table 31: Demobilization Pay Problems: 

Table 32: Pay Problem by Phase: 

Table 33: Mobilization Pay Problems: 

Table 34: Deployment Pay Problems: 

Figures: 

Figure 1: Three Key Phases for Active Duty Payments to Army Reserve 
Soldiers: 

Figure 2: Key Systems Involved in Authorizing, Entering, Processing, 
and Paying Mobilized Army Reserve Soldiers Are Not Effectively 
Integrated or Interfaced: 

Figure 3: 824th Quartermaster Company's Mobilization Time Line: 

Figure 4: 965th Dental Company's Mobilization Time Line: 

Figure 5: 948th Forward Surgical Team's Mobilization Time Line: 

Figure 6: 443rd Military Police Company's Mobilization Time Line: 

Figure 7: FORSCOM Support Unit Soldier Time Line: 

Figure 8: 629th Transportation Company's Time Line: 

Figure 9: 3423rd Military Intelligence Company's Mobilization Time 
Line: 

Figure 10: 431st Chemical Detachment's Mobilization Time Line: 

Abbreviations: 

DOD: Department of Defense: 

DFAS: Defense Finance and Accounting Service: 

DJMS-RC: Defense Joint Military Pay System - Reserve Component: 

DMO: Defense Military Pay Office system: 

FMR: Financial Management Regulation: 

FORSCOM: Army Forces Command: 

PMARS: Participation Management and Reporting Subsystem: 

RLAS: Regional Level Application System: 

SRP: Soldier Readiness Processing: 

TAPDB-R: Total Army Personnel Database - Reserves: 

TRANSPROC: Transition Processing System: 

USARC: United States Army Reserve Command: 

Letter August 20, 2004: 

Congressional Requesters: 

In November 2003, we reported[Footnote 1] on significant pay problems 
experienced by mobilized Army National Guard soldiers, including 450 of 
481 soldiers at six case study units who had at least one pay problem 
associated with their mobilization. Because of the severity of the 
problems identified for mobilized Army National Guard soldiers, you 
asked us to examine the accuracy and timeliness of payroll payments to 
mobilized Army Reserve soldiers. Specifically, the objectives of our 
audit were to (1) provide an in-depth perspective on the pay 
experiences of mobilized Army Reserve soldiers and (2) assess the 
overall design of the processes, human capital, and automated systems 
relied on to provide accurate and timely pays, allowances, and tax 
benefits to mobilized Army Reserve soldiers.

Our preliminary assessment of the internal control environment and the 
design of key controls associated with payments to mobilized Army 
Reserve soldiers indicated that the accuracy and timeliness of these 
payments are highly dependent on inherently flawed processes and 
controls. Active duty payments to mobilized Army Reserve soldiers rely 
on many of the same Department of Defense (DOD) and Army policies and 
procedures and automated systems used to pay mobilized Army National 
Guard soldiers. Further, DOD has reported[Footnote 2] to Congress on 
major deficiencies in the delivery of military payroll and related 
personnel services, including those used to support both Army National 
Guard and Army Reserve soldiers.

Consequently, as was the case for our audit of payments to mobilized 
Army National Guard soldiers, rather than statistically testing the 
effectiveness of inherently flawed processes and controls, we relied 
primarily on a case study approach to provide perspective on the pay 
experiences of mobilized Army Reserve soldiers. We selected Army 
Reserve units mobilized at some point during the period from August 
2002 through January 2004 as case studies to provide a more in-depth 
perspective on Army Reserve soldiers' pay experiences and their 
underlying causes. Our case studies included seven Army Reserve units 
deployed overseas to carry out assigned combat support missions as part 
of Operations Enduring Freedom or Iraqi Freedom and one unit activated 
to perform services as part of critical homeland defense operations 
under Operation Noble Eagle.

We performed our work from November 2003 through June 2004 in 
accordance with generally accepted government auditing standards. The 
pay problems we identified were based on a comparison of soldiers' pay 
records with available supporting documentation. Our audit was intended 
to provide perspective on soldiers' pay experiences and may not have 
identified all pay problems at our case study units. In addition, our 
audit was not designed to result in an exact determination of the pay, 
allowances, and tax benefits soldiers should have received. We provided 
the results of our pay analysis to Army Reserve officials for an exact 
determination of any amounts owed the government or soldiers related to 
the mobilizations audited. A more detailed description of the scope and 
methodology is included in appendix I.

We requested comments on a draft of this report from the Secretary of 
Defense or his designee. We received written comments from the Under 
Secretary of Defense (Comptroller), which are reprinted in appendix X.

Results in Brief: 

The processes and automated systems relied on to provide active duty 
payments to mobilized Army Reserve soldiers are so error-prone, 
cumbersome, and complex that neither DOD nor, more importantly, the 
Army Reserve soldiers themselves, could be reasonably assured of timely 
and accurate payments. These weak processes and automated systems 
resulted in a significant number of overpayments, and to a lesser 
extent, late and underpayments, of soldiers' active duty pays and 
allowances at the eight case study units we audited. Specifically, 332 
of 348 soldiers (95 percent) at eight Army Reserve units experienced at 
least one problem with the active duty pays and allowances they were 
entitled to receive. Many of the soldiers experienced multiple pay 
problems associated with their active duty mobilizations. Some of the 
pay problems soldiers experienced often lingered unresolved for 
considerable lengths of time, some for over a year. Nearly all soldiers 
in the seven case study units deployed overseas had problems with their 
location-based pays, particularly their hardship duty pay. In addition, 
while soldiers in the seven units that were deployed overseas were 
entitled to receive their pays and allowances tax free, and therefore, 
free of tax withholding from pay when they first arrived in-theater, 
few, if any, received this benefit until at least a month after 
arrival.

Of the $375,000 in active duty pay and allowance problems we identified 
for the Army Reserve soldiers in our case study units, the majority 
were overpayments. Included in the total of 256 Army Reserve soldiers 
that received an estimated $247,000 in overpayments, were several 
instances of soldiers who received significant overpayments, but did 
not acknowledge the receipt or set aside sufficient funds to repay 
these erroneous overpayments. In these instances, the soldiers may be 
subject to criminal prosecution. For example, we referred for criminal 
investigation one soldier who did not mobilize with his unit, yet 
erroneously received over $36,000 in active duty pays and did not 
report this overpayment. We also identified 245 Army Reserve soldiers 
at our case study units who received a total of about $77,000 in late 
payments of their active duty pays and allowances, and 294 soldiers who 
were underpaid a total of about $51,000 in active duty pays and 
allowances.

Taken together, a considerable amount of effort by individual Army 
Reserve soldiers and their families was often required to gather and 
complete the required documentation to support pay entitlements, 
resolve pay errors, and identify and repay debts associated with 
numerous pay errors. A number of soldiers and their families told us 
they spent considerable time and effort on these pay issues, sometimes 
while soldiers were deployed in remote, hostile environments overseas. 
In particular, resolving soldier debts resulting from erroneous 
overpayments was burdensome to both the soldier and DOD. Soldiers were 
sometimes required to spend considerable time and were frustrated in 
their efforts to determine the exact sums owed or establish a repayment 
plan. Further, these overpayment debts placed an additional labor-
intensive burden on the Army and the Defense Finance and Accounting 
Service (DFAS) to manually compute the exact amounts owed and establish 
and monitor the recoupment of these sums from the soldiers. These pay 
issues may adversely impact Army Reserve soldiers' morale, and, 
ultimately, may adversely affect the Army's ability to retain these 
important soldiers.

One of the primary causes of the pay problems we found was the 
inadequate procedures relied on to maintain accountability over 
soldiers and their associated pays, allowances, and tax benefits as 
they moved through their active duty mobilization, including processing 
through various levels of Army, Army Reserve, DFAS, and DOD 
organizations. We also found pay problems associated with breakdowns in 
soldier accountability responsibilities assigned to unit commanders and 
unit administrators. For example, we found that flawed procedures for 
ensuring that documentation showing that soldiers were no longer at an 
overseas deployment location or on active duty (such as revoked orders 
or return from active duty orders), led to many of the overpayments we 
identified. Because pay personnel did not receive timely documentation 
on soldiers' departure from an overseas deployment, 47 soldiers with 
the 824th Quartermaster Company from North Carolina improperly received 
several months of hardship duty pay, totaling about $30,000, after they 
left Kuwait.

With respect to human capital, the dedicated and determined efforts of 
many involved in the current operations relied on to pay mobilized Army 
Reserve soldiers were handicapped by various human capital challenges, 
including (1) inadequate resources to support critical unit pay 
administration functions, (2) deficiencies in the training provided to 
key personnel on pay entitlements and pay transaction processing 
requirements, and (3) poor customer service. A sufficient number of 
well-trained military pay staff is particularly crucial given the 
extensive, cumbersome, and labor-intensive process requirements that 
have evolved to support active duty pay to Army Reserve soldiers.

Our audits of the pay experiences of soldiers assigned to our case 
study units identified instances in which unit-level pay management 
support deficiencies contributed to pay errors. These unit-level pay 
management deficiencies were particularly problematic for units with 
vacant unit administrator positions, or where the unit administrator 
was deployed with the unit in another capacity. For example, lacking an 
individual assigned to carry out unit administrator duties, 9 of the 11 
soldiers with the 3423rd Military Intelligence Detachment case study 
unit from Connecticut erroneously received the overseas cost of living 
allowance instead of the continental United States cost of living 
allowance for their deployment to Fort Belvoir. We also found that 
inadequate training of both key unit administrators and Army finance 
pay technicians led to pay errors. Personnel in both of these key 
positions told us that they relied primarily on on-the-job training 
when they assumed their responsibilities. A related human capital 
issue--customer support for active duty pay issues--was a recurring 
concern at our case study units. For example, it took over a year, and 
about 20 phone calls, e-mails, and faxes, after one Army Reserve 
officer contacted the Army to settle the debt resulting from the 
erroneous active duty pay, allowances, and combat zone tax exclusion 
benefits he received.

Several automated systems issues were also major causal factors 
associated with the pay problems we identified. The labor-intensive 
manual entry and reentry of pay transactions into multiple 
nonintegrated systems, and further data entry required to correct pay 
errors and related debts, were major contributing factors. We also 
found that limited automated system processing capabilities, 
necessitating extensive costly manual workarounds, and inadequate 
automated system edits were major factors in this area. For example, 
the payroll system cannot simply stop withholding federal taxes for 
soldiers deployed in designated combat zones, but instead must first 
withhold the taxes and then in the following month's pay processing, 
reimburse the soldier for the taxes previously withheld.

DOD has taken a number of actions, and has other actions under way, in 
response to recommendations in our November 2003 Army National Guard 
pay report. Our November 2003 report included both short-and longer-
term recommendations. Because active duty payments to mobilized Army 
Reserve soldiers rely on many of the same procedures and automated 
systems used to pay mobilized Army National Guard soldiers, many of 
these recommendations and DOD's responsive actions also apply to Army 
Reserve active duty pays. Many of DOD's actions directed at improving 
the accuracy and timeliness of payments to both mobilized Army National 
Guard and Army Reserve soldiers were implemented in the fall of 2003 or 
later. For example, in June 2004, the Army issued a Finance 
Mobilization and Demobilization Standing Operating Procedure covering 
pay management responsibilities and transaction processing 
requirements to be followed for all Army Reserve and Army National 
Guard soldiers mobilized to active duty. Because the Army Reserve 
soldier pay experiences we audited ended in January 2004, DOD's actions 
in response to our previous recommendations were not in place in 
sufficient time to impact the soldiers' pay experiences we audited. 
However, if effectively and fully implemented, many of DOD's actions 
directed at our short-term recommendations should help reduce the 
incidence of the types of pay problems we identified in our case 
studies.

Nonetheless, because five of the applicable recommendations in our Army 
National Guard pay report have not yet been fully addressed, we are 
reiterating these open recommendations. We are making 15 additional 
recommendations to address Army Reserve-unique issues. It is imperative 
that DOD act swiftly to fully implement these near-term recommendations 
to realize significant reductions in the extent of Mobilized Army 
Reserve soldiers' pay problems. However, even full, effective actions 
in response to all near-term recommendations will not resolve the 
underlying causes of the pay problems we identified. These underlying 
causes can only be addressed as part of a longer term comprehensive 
reengineering of existing processes, human capital practices, and 
automated systems. Until these more substantive actions can be put in 
place, Army Reserve soldiers are likely to continue to experience 
significant problems in receiving accurate and timely active duty 
payments. In its comments on a draft of this report, DOD agreed with 
our recommendations and outlined its actions to address the 
deficiencies noted in our report.

Background: 

The Army Reserve is a partner with the active Army and the Army 
National Guard in fulfilling the country's military and contingency 
needs. The Army Reserve provides nearly half of the Army's combat 
support capabilities.[Footnote 3] The Army Reserve has approximately 
2,000 units that drill at 1,500 Army Reserve Centers located in 
communities spread throughout the United States and territories. As of 
May 2004, the Army Reserve reported that it had about 328,000 members 
in the Ready Reserve.[Footnote 4]

During peacetime, Army Reserve units report to the United States Army 
Reserve Command (USARC), located in Atlanta, Georgia, and the Chief of 
the Army Reserve, located in Washington, D.C. In addition, the Army 
Reserve has established Regional Readiness Commands to provide 
resource, logistics, and personnel management support for Army Reserve 
units within their region. When not mobilized to active duty, Army 
Reserve units are required to maintain readiness at a sufficiently high 
level to facilitate prompt active duty mobilization. While in a reserve 
status, Army Reserve soldiers are required to attend one drill weekend 
each month and obtain a minimum amount of training (usually about 2 
weeks) each year. During national emergencies, the President has the 
authority to mobilize the Army Reserve to active duty status. While 
mobilized, Army Reserve units are accountable to the combatant 
commander of the theater in which they are assigned to operate, and 
ultimately, to the President.

On September 14, 2001, the President declared a national emergency as a 
result of the terrorist attacks on the World Trade Center and the 
Pentagon and the continuing and immediate threat of further attacks on 
the United States. Concurrent with this declaration, the President 
authorized the Secretary of Defense to mobilize reserve troops to 
active duty pursuant to 10 U.S.C. Section 12302. The Secretary of 
Defense delegated to the Secretary of the Army the authority to order 
Army Reserve soldiers to active duty. Since September 2001, the Army 
has mobilized unprecedented numbers of Army Reserve soldiers (as well 
as other reserve and national guard forces) to active duty on lengthy 
tours. DOD reported that as of April 2004, about 96,000 Army Reserve 
soldiers have been mobilized to active duty at some point since 
September 2001 to carry out critical missions.

In contrast to the Army National Guard forces that may be assigned 
traditional combat roles, Army Reserve forces are generally assigned 
combat support missions. The Army National Guard and Army Reserve both 
include military police and intelligence units. However, while the Army 
National Guard has special forces and other units that have combat 
mission assignments, Army Reserve units are generally limited to combat 
support mission assignments, such as supply, medical, and 
transportation operations.

Army Reserve soldiers' mobilizations during the period of our audit 
were also affected by two other Army actions. First, the Army issued a 
"stop loss" order affecting Army Reserve soldiers in November 2002. The 
stop loss order was authorized by statute[Footnote 5] and allows the 
Army to retain soldiers in the service beyond their date of separation 
or retirement for an open-ended period.[Footnote 6] Second, in November 
2003, the Army extended the orders for all mobilized Army Reserve 
soldiers expected to return from active duty on December 1, 2003, for 
an additional year.[Footnote 7]

There have been three major contingency operations involving mobilized 
Army Reserve soldiers since September 2001: Operation Noble Eagle, 
Operation Enduring Freedom, and Operation Iraqi Freedom. In general, 
missions to provide domestic defense were funded through Operation 
Noble Eagle, missions to fight terrorism outside the United States were 
initially funded under Operation Enduring Freedom. More recently, 
missions related to the combat in Iraq and subsequent policing 
operations in that region were funded under Operation Iraqi Freedom. 
For example, Army Reserve soldiers participated in combat support 
missions in Afghanistan that were carried out as part of Operation 
Enduring Freedom, whereas Army Reserve soldiers participating in 
homeland security missions, such as assisting in intelligence data 
analysis, were considered part of Operation Noble Eagle.

According to Army Reserve data, approximately 45,700 Army Reserve 
soldiers were activated as of April 2004. At that time, Army Reserve 
soldiers accounted for about 27 percent of all mobilized DOD reserve 
components.[Footnote 8] Many of these Army Reserve soldiers were 
mobilized as small units, including about 2,800 units with 10 or fewer 
soldiers and about 1,000 one-soldier units. The Army assigns a separate 
unit identification number to each of these small groups or detachments 
of Army Reserve soldiers (these units are known as derivative units). 
According to Army Reserve data as of April 2004, the Army Reserve had 
soldiers assigned to almost 6,000 different unit numbers.

While on active duty, all Army Reserve soldiers earn various 
statutorily authorized types of pays and allowances. The types and 
amounts of pays and allowances that Army Reserve soldiers are eligible 
to receive vary depending upon rank and length of service, dependency 
status, skills and certifications acquired, duty location, and the 
difficulty of the assignment. While Army Reserve soldiers mobilized to 
active duty may be entitled to receive over 50 types of pays and 
allowances, we focused on 14 types of pays and allowances applicable to 
the Army Reserve units we selected for case studies. As shown in table 
1, we categorized these 14 pay and allowance types into two groups: (1) 
pays, including basic pay, medical and dental and foreign language 
proficiency skill-based pays, and location-based hostile fire and 
hardship duty pays, and (2) allowances, including allowances for 
housing, subsistence, family separation, and cost of living for the 
continental United States.[Footnote 9]

Table 1: Active Duty Pays and Allowances Associated with Case Study 
Units: 

Pays: Basic pay; 
Description: Salary; 
Dollar amount: Varies depending on rank and years of service.

Pays: Hazardous duty pay (jump pay); 
Description: Pay for parachute jumping; 
Dollar amount: $150 per month.

Pays: Aviation career incentive pay; 
Description: Pay for officers performing operational flying duty; 
Dollar amount: Varies from $125 to $840 per month based on years of 
aviation service.

Pays: Foreign language proficiency pay; 
Description: Pay for specialized foreign language skills; 
Dollar amount: Varies depending on proficiency but may not exceed $300 
per month.

Pays: Hardship duty location pay for designated areas; 
Description: Pay when assigned to duty in specified locations; 
Dollar amount: $50, $100, or $150 per month (depending on duty 
location).

Pays: Hardship duty location pay for certain places (phase out began 
on January 1, 2002); 
Description: Pay to enlisted soldiers when assigned to duty in 
specified locations; 
Dollar amount: Varies from $8 to $22.50 per month depending on rank.

Pays: Medical and dental pays; 
Description: Various special entitlements and incentives for medical 
and dental professionals; 
Dollar amount: Varies from $100 per month to $3,000 per month 
depending on medical specialty, professional qualifications, and 
creditable service.

Pays: Hostile fire/imminent danger pay; 
Description: Full pay for any portion of month when assigned to a 
location subject to or in proximity to hostile fire or assigned to 
duty in a designated imminent danger location; 
Dollar amount: $150 per month through September 30, 2002, $225 per 
month, effective October 1, 2002, through December 31, 2004.

Allowances: Basic allowance for housing; 
Description: Meant to offset the cost of housing when member does not 
receive government-provided housing; 
Dollar amount: Varies depending on location, rank, and whether member 
has dependents.

Allowances: Basic allowance for subsistence; 
Description: Meant to offset costs for a member's meals; 
Dollar amount: Varies depending on whether member is officer or 
enlisted.

Allowances: Family separation allowance I; 
Description: Meant to offset added housing expenses resulting from 
forced separation from dependents; 
Dollar amount: Equivalent to monthly basic allowance for housing for 
member of same rank without dependents.

Allowances: Family separation allowance II; 
Description: Meant to offset certain expenses resulting from forced 
separation from dependents; 
Dollar amount: $100 per month from January 1, 1998, through September 
30, 2002; $250 per month effective October 1, 2002, through December 
31, 2004.

Allowances: Cost of living allowance in the continental United States; 
Description: Meant to provide compensation for variations in costs 
(other than housing) in the continental United States; 
Dollar amount: Varies depending on location, rank, years of service, 
and whether member has dependents.

Allowances: Overseas housing allowance; 
Description: Meant to provide compensation for variations in housing 
costs overseas; 
Dollar amount: Varies depending on location, rank, and whether the 
member has dependents. 

Source: GAO analysis.

[End of table]

Several of these types of pays and allowances have multiple 
subcategories of entitlement. For example, there are eight different 
types of basic allowances for housing that soldiers may be entitled to 
receive based on individual circumstances and documentation (including 
documents establishing dependency status or court documents). In 
addition, Army Reserve soldiers may be eligible for significant tax 
advantages associated with their mobilization to active duty. Mobilized 
Army Reserve soldiers assigned to or working in a designated combat 
zone are entitled to exclude from taxable income certain types of 
military pays that would otherwise be taxable.[Footnote 10]

In addition to the complexities of determining and documenting the 
specific circumstances surrounding each individual soldier's initial 
active duty pay, allowance, and tax benefit entitlements, these types 
of pays and benefits are further complicated because entitlements vary 
depending on soldiers' locations as they move through their active duty 
tours. That is, maintaining effective accountability and paying 
mobilized Army Reserve soldiers as they move from location to location 
during their active duty tours require extensive close coordination 
among a variety of operational, personnel, finance, and pay 
organizations throughout DOD. Key components requiring closely 
coordinated efforts in this worldwide team are the: 

* mobilized soldier;

* unit commanders and unit administrators for all mobilized Army 
Reserve units;

* United States Army Reserve Pay Center located at Fort McCoy;

* Army Reserve Pay Management Division at Fort McPherson;

* 12 Army Reserve Regional Readiness Commands;

* U.S. Army Finance Command;

* personnel and finance offices at Army mobilization stations;

* Army area servicing finance offices assigned to support deployed 
units;

* personnel and finance offices at Army demobilization stations;

* Defense Finance and Accounting Service (DFAS) at Indianapolis, 
Indiana;

* DFAS at Denver, Colorado; and: 

* DFAS at Cleveland, Ohio.

As shown in figure 1, three key phases are associated with the pays and 
allowances applicable to mobilized Army Reserve soldiers: (1) 
mobilization: starting applicable active duty pays and allowances, (2) 
deployment: starting and stopping applicable location-based active duty 
pays while continuing other nonlocation-based active duty pay and 
allowance entitlements, and (3) demobilization: stopping active duty 
pays and allowances.

Figure 1: Three Key Phases for Active Duty Payments to Army Reserve 
Soldiers: 

[See PDF for image] 

[End of figure] 

Mobilization Phase: 

During the initial mobilization, units receive an alert order and begin 
a mobilization preparation program, Soldier Readiness Processing (SRP). 
Among other things, the SRP is intended to ensure that each soldier's 
financial records are in order. The initial SRP is to be conducted by 
the unit's administrator at the unit's home station assisted by 
personnel from the cognizant Army Reserve Regional Readiness Command or 
designee. This initial SRP is to include a verification of the accuracy 
of records supporting applicable active duty pays and allowances. The 
unit commander, supported by the unit administrator, is responsible for 
ensuring that all personnel data, such as birth certificates for 
dependents or foreign language certifications, are current for all 
soldiers under their command.

During this phase, the unit administrator is required to gather all 
supporting documents and send the documentation to the Reserve Pay 
Center at Fort McCoy. Pay technicians at the Reserve Pay Center are 
responsible for entering transactions to start initiating basic pay and 
allowances for mobilized Army Reserve soldiers based on the active duty 
tour information that appears on a hard copy of each soldier's 
mobilization order. If transactions are entered correctly and on time, 
activated Army Reserve soldiers will automatically start to receive 
basic pay and basic allowances for housing and subsistence based on the 
entered active duty mobilization start date.

After soldiers complete their initial SRP, they travel as a unit to an 
assigned active duty Army mobilization station. At the mobilization 
station, mobilized Army Reserve soldiers are required to undergo a 
second SRP. As part of this second SRP, finance personnel at the 
mobilization station are responsible for confirming or correcting the 
results of the first SRP, including obtaining the documentation 
necessary to support any changes needed to the automated pay records. 
Pay technicians at the various Army mobilization stations are required 
to promptly initiate appropriate active duty pay and allowance 
transactions that were not initiated during the first SRP. Transactions 
to initiate and terminate pays for all mobilized Army Reserve soldiers 
entitled to receive special medical and dental pay entitlements are 
entered and processed centrally at DFAS-Indianapolis.

Deployment Phase: 

While Army Reserve soldiers are deployed on active duty, there are 
several active Army and DFAS components involved in paying them. The 
Army area servicing finance office, which may be within the United 
States or in a foreign country, is responsible for initiating pays 
earned while the soldier is located in certain specified locations, 
such as location-based pays for hostile fire and hardship duty. Pay 
technicians at these area servicing finance offices are responsible for 
starting these types of pays for each soldier based on documentation, 
such as annotated battle rosters or flight manifests, showing when 
soldiers arrived at these designated locations. Thereafter, hostile 
fire pay is automatically generated each pay period until an 
established end-of-tour date is reached or a pay technician manually 
stops the pay. In contrast, other location-based pays, such as hardship 
duty pay, require manual entry of pay transactions each month by the 
assigned Army area servicing finance office.

While the designated Army area servicing finance offices have primary 
responsibility for administering pay for deployed Army Reserve 
soldiers, particularly starting and stopping location-based active duty 
pays (such as hardship duty pay), finance personnel at the cognizant 
mobilization station or at the Reserve Pay Center can also enter 
certain pay-altering transactions that occur during deployments, such 
as those related to a soldier's early separation from active duty. In 
addition, the Reserve Pay Center has responsibility for entering all 
monthly nonlocation-based, nonautomated pay and allowance 
transactions, such as foreign language proficiency pay.

Demobilization Phase: 

Upon completion of an active duty tour, Army Reserve soldiers normally 
return to the same active Army locations from which they were mobilized 
for demobilization processing before returning to their home stations. 
The personnel section at the demobilization station is required to 
provide each soldier and the military pay technicians at the 
demobilization station with a copy of the Release from Active Duty 
order and a DD Form 214, Certificate of Release or Discharge from 
Active Duty. The demobilization station military pay technicians are 
required to use the date of release from active duty shown on these 
documents as a basis for stopping all Army Reserve soldiers' active 
duty pay and allowances. The Reserve Pay Center is responsible for 
discontinuing monthly input of all nonlocation-based, nonautomated pays 
and allowances. If the active Army demobilization station did not take 
action to stop active duty payments for demobilized Army Reserve 
soldiers, or if a soldier did not return to the demobilization station 
for active duty out-processing, the responsibility for stopping active 
duty pays and allowances falls to the soldier's unit or the Reserve Pay 
Center.

Automated Systems Environment: 

Paying Army Reserve soldiers is complicated by the number of 
nonintegrated, automated order-writing, tactical, personnel, and pay 
systems involved in authorizing, entering, and processing active duty 
pays and allowances to mobilized Army Reserve soldiers during the 
mobilization, deployment, and demobilization phases of their active 
duty tours. These automated systems are: 

* the Defense Joint Military Pay System - Reserve Component (DJMS-RC)-
-a DFAS-operated system used to pay reserve soldiers;

* the Defense Military Pay Office (DMO)--data input system used to 
enter pay transactions for processing;

* the Army Reserve's Regional Level Application System (RLAS), 
including its personnel order-writing functions;

* the Total Army Personnel Database-Reserves (TAPDB-R);

* the Army's Tactical Personnel System; and: 

* the Army's Transition Processing (TRANSPROC) System.

Many of these systems were originally designed for other purposes, but 
have been adapted to help support payments to mobilized Army Reserve 
soldiers. For example, DJMS-RC,[Footnote 11] a large, complex automated 
payroll system application now used to pay Army and Air National Guard 
and Army and Air Force Reserve soldiers, was originally designed to be 
used to pay Reserve and Guard soldiers for monthly drills, short 
periods (30 days or fewer) of active duty or training. DFAS has 
acknowledged that its current military pay systems (including DJMS-RC) 
are aging, unresponsive, fragile, and a major impediment to efficient 
and high-quality customer service.

DFAS has primary responsibility for developing guidance and managing 
system operations for DJMS-RC. DFAS-Denver is responsible for 
designing, developing, and maintaining customer requirements for all of 
DOD's military pay services. Its Technical Support Office is 
responsible for designing and maintaining the DJMS-RC core pay 
software. DFAS-Indianapolis is the central site for oversight of all 
Army military pay. As such, DFAS-Indianapolis is responsible for 
maintaining an estimated 1 million Army soldier pay records, including 
those for Army Reserve soldiers. DFAS-Indianapolis serves as a 
"gatekeeper" for DJMS-RC in that it monitors the daily status of data 
uploaded to the system to ensure that all received transactions are 
processed.

After manual entry of the mobilization dates from hard copies of 
mobilization orders into DJMS-RC, DJMS-RC is designed to automatically 
generate most active duty pay and allowance payments based on the 
mobilization date, twice a month, until the stop date is entered into 
the system. Without additional manual intervention, DJMS-RC will 
automatically stop generating these active duty payments to Army 
Reserve soldiers as of the stop date recorded in DJMS-RC. This 
automated edit control feature is intended to prevent erroneous 
payments to soldiers beyond their authorized end of active duty date. 
Because pay and personnel systems are not integrated, human 
intervention and additional manual data entry are required when a pay 
or allowance error is detected or an event occurs that requires a 
change in the soldier's pay-related personnel and pay records. For 
example, a change in dependent status, such as marriage or divorce; a 
promotion; jump pay disqualification; or being demobilized before the 
active duty tour end date shown on a soldier's original mobilization 
order would necessitate manual input to appropriately change or 
eliminate some of the pays and allowances a soldier would be entitled 
to receive.

All Army Reserve soldier pays and allowances are to be documented in 
the Master Military Pay Account--the central repository for soldier pay 
records in DJMS-RC. All pay-related transactions that are entered into 
DJMS-RC, primarily through the DMO input application, update the Master 
Military Pay Account. DMO is the DJMS-RC pay input subsystem used by 
the Reserve Pay Center, active Army finance offices, and military pay 
offices--including offices located at overseas locations throughout the 
world--to enter transactions to initiate and stop active duty pays to 
mobilized Army Reserve soldiers. DMO is used to manually enter 
transactions to (1) initiate any Army Reserve soldier pay and 
allowances that were not started at initial mobilization, as well as 
applicable location-based pays, such as hostile fire and hardship duty 
pays, (2) stop all location-based pays when soldiers depart designated 
locations, and (3) stop all active duty pays and allowances at 
demobilization.

In addition to DJMS-RC and DMO, the Army Reserve relies on four other 
nonintegrated automated systems as a basis for authorizing active duty 
pay, allowance, and related benefit entitlements to mobilized Army 
Reserve soldiers: 

* RLAS is operated at the Army Reserve's regional support locations and 
contains multiple modules to support regional human resource, resource 
management, and training operations for Army Reserve soldiers. The 
personnel module within RLAS is used to process Army Reserve personnel 
actions, including those that have an impact on pay, such as promotions 
and discharges. Within the personnel module, there is an order-writing 
sub-module used for writing and generating mobilization orders for 
individual Army Reserve soldiers. Army Reserve soldier data in the 
personnel module of RLAS is used by the RLAS order-writing sub-module 
to help create the individual orders for mobilized soldiers.

* TAPDB-R is the central repository for Army Reserve-wide personnel 
data. Selected pay-related personnel data, such as solders' initial 
enrollment in the Army Reserve, contained in Army Reserve soldiers' pay 
records in DJMS-RC, are received through an automated interface with 
TAPDB-R.

* The Tactical Personnel System is a stand-alone Army-wide personnel 
system operated by Army personnel at overseas airports where Army 
soldiers first enter or leave an overseas deployment location. Hard 
copies of Tactical Personnel System-generated manifests showing names 
and dates of soldiers' arrivals and departures are one source of 
authorization for starting or stopping Army Reserve soldiers' location-
based hostile fire pay, hardship duty pay, and combat zone tax 
exclusion tax benefits. Arriving and departing soldiers can enter data, 
such as name, rank, and Social Security number, into the Tactical 
Personnel System from their common access cards using a barcode scanner 
function.

* TRANSPROC is an Army-wide system used to track and support Army 
soldier processing at mobilization and demobilization stations. 
TRANSPROC is used to generate a DD Form 214, Certificate of Release or 
Discharge from Active Duty, for Army Reserve soldiers completing their 
active duty mobilization tours.

Case Studies Illustrate Pay Problems: 

We identified significant pay problems at all eight of the Army Reserve 
case study units we audited. Specifically, we identified 256 Army 
Reserve soldiers who were overpaid their active duty pay and allowance 
entitlements by about $247,000, 245 soldiers who received late pay and 
allowance payments of about $77,000, and 294 soldiers who were 
underpaid their pay and allowance entitlements by about $51,000. As 
discussed in the following sections, we found that these pay problems 
were associated with a series of processes, human capital issues, and 
automated system deficiencies.

The Army Reserve units we audited for our case studies had various 
functions, including a Quartermaster (supply), dental services, 
transportation, military police, and military intelligence unit. These 
units were assigned a variety of combat support missions associated 
with the global war on terrorism while mobilized on active duty in and 
around Iraq, Afghanistan, Qatar, and Kuwait and in support of 
intelligence operations here in the United States. The units we 
audited, their locations, and information about their mobilizations are 
shown in table 2.

Table 2: Army Reserve Units Audited: 

Army Reserve unit and location: 824th Quartermaster Company - Fort 
Bragg, N.C; 
Mobilization station: Fort Bragg, N.C; 
Deployment location: Kuwait, Afghanistan, and Fort Bragg; 
Mission: Prepared parachutes, weapons, and aid packages; 
Mobilization dates: 2/03 - 9/03; 
Number of soldiers mobilized: 68.

Army Reserve unit and location: 965th Dental Company - Seagoville, Tex; 
Mobilization station: Fort Hood, Tex; 
Deployment location: Kuwait; 
Mission: Provided emergency and sustaining dental care supporting 
combat operations; 
Mobilization dates: 2/03 - 6/03; 
Number of soldiers mobilized: 93.

Army Reserve unit and location: 948th Forward Surgical Team - 
Southfield, Mich; 
Mobilization station: Fort McCoy, Wis; 
Deployment location: Afghanistan; 
Mission: Provided emergency and sustaining medical care supporting 
combat operations in Afghanistan; 
Mobilization dates: 1/03 - 8/03; 
Number of soldiers mobilized: 20.

Army Reserve unit and location: 443rd Military Police - Owings Mills, 
Md; 
Mobilization station: Fort Lee, Va; 
Deployment location: Iraq; 
Mission: Guarded Iraqi prisoners at former Camp Cropper Prison at 
Baghdad airport; 
Mobilization dates: 2/03 - 1/04; 
Number of soldiers mobilized: 121.

Army Reserve unit and location: FORSCOM Support - Finksburg, Md; 
Mobilization station: Fort McPherson, Ga; 
Deployment location: Qatar; 
Mission: Served as ground liaison officer between Army and Air Force 
combat flight operations based in Qatar; 
Mobilization dates: 3/03 - 5/ 03; 
Number of soldiers mobilized: 1.

Army Reserve unit and location: 629th Transportation Detachment-Fort 
Eustis, Va; 
Mobilization station: Fort Eustis, Va; 
Deployment location: Kuwait; 
Mission: Tracked supplies in and out of Kuwait; 
Mobilization dates: 3/03 -1/04; 
Number of soldiers mobilized: 24.

Army Reserve unit and location: 3423rd Military Intelligence Detachment 
- New Haven, Conn; 
Mobilization station: Fort Lee, Va; 
Deployment location: Fort Belvoir, Va; 
Mission: Supported National Ground Intelligence Center operations; 
Mobilization dates: 12/02 - 12/ 03; 
Number of soldiers mobilized: 11.

Army Reserve unit and location: 431st Chemical Detachment - Johnstown, 
Pa; 
Mobilization station: Fort Dix, N.J; 
Deployment location: Kuwait; 
Mission: Provided nuclear, biological, and chemical warning and 
reporting support to military operations; 
Mobilization dates: 1/03 - 7/03; 
Number of soldiers mobilized: 10.

Total soldiers: 348.

Source: GAO analysis.

[End of table]

Overall, 332 of the 348 soldiers (95 percent) in our eight case study 
units that were mobilized, deployed, and demobilized at some time 
during the 18-month period from August 2002 through January 2004 had 
at least one pay problem associated with their mobilization to active 
duty. Many of the soldiers had multiple pay problems associated with 
their active duty mobilizations. Problems lingered unresolved for 
considerable lengths of time. For example, for some soldiers, problems 
lingered through the entire period of their active duty mobilization 
and for several months after their active duty tours ended. Table 3 
summarizes the number of Army Reserve soldiers at each of our case 
study locations that had at least one problem associated with their 
pays and allowances during each of the three phases of their active 
duty mobilization.

Table 3: Pay Problems at Eight Case Study Units: 

Army Reserve unit: 824th Quartermaster Company, Va; 
Soldiers with pay problems: Mobilization: 11 of 68; 
Soldiers with pay problems: Deployment: 50 of 68; 
Soldiers with pay problems: Demobilization: 13 of 68.

Army Reserve unit: 965th Dental Company, Tex; 
Soldiers with pay problems: Mobilization: 25 of 93; 
Soldiers with pay problems: Deployment: 86 of 93; 
Soldiers with pay problems: Demobilization: 7 of 93.

Army Reserve unit: 948th Forward Surgical Team, Mich; 
Soldiers with pay problems: Mobilization: 5 of 20; 
Soldiers with pay problems: Deployment: 20 of 20; 
Soldiers with pay problems: Demobilization: 18 of 20.

Army Reserve unit: 443rd Military Police Company, Md; 
Soldiers with pay problems: Mobilization: 67 of 121; 
Soldiers with pay problems: Deployment: 114 of 121; 
Soldiers with pay problems: Demobilization: 17 of 121.

Army Reserve unit: FORSCOM Support Unit, Md; 
Soldiers with pay problems: Mobilization: 0 of 1; 
Soldiers with pay problems: Deployment: 1 of 1; 
Soldiers with pay problems: Demobilization: 1 of 1.

Army Reserve unit: 629th Transportation Detachment, Va; 
Soldiers with pay problems: Mobilization: 5 of 24; 
Soldiers with pay problems: Deployment: 24 of 24; 
Soldiers with pay problems: Demobilization: 1 of 24.

Army Reserve unit: 3423rd Military Intelligence Detachment, Conn; 
Soldiers with pay problems: Mobilization: 10 of 11; 
Soldiers with pay problems: Deployment: 10 of 11; 
Soldiers with pay problems: Demobilization: 9 of 11.

Army Reserve unit: 431st Chemical Detachment, Pa; 
Soldiers with pay problems: Mobilization: 6 of 10; 
Soldiers with pay problems: Deployment: 10 of 10; 
Soldiers with pay problems: Demobilization: 0 of 10.

Source: GAO analysis.

[End of table] 

We counted soldiers' pay problems as a problem only in the phase in 
which the problem first occurred, even if the problems persisted into 
subsequent phases. In addition, many soldiers had more than one problem 
associated with their entitled pays and allowances. Further, our case 
study audits reflect only the problems we identified. However, because 
our audits were only intended to provide more detailed perspective on 
the types and causes of any pay problems experienced by mobilized Army 
Reserve soldiers, rather than an exact calculation of what soldiers 
should have received, we likely did not identify all of the active duty 
pay and allowance problems related to our case study units.

In addition to pay and allowance problems, while we did not attempt to 
fully quantify the tax withholding and tax filing effects, we also 
identified problems with timeliness and accuracy of combat zone tax 
exclusion benefits for soldiers with the seven case study units we 
audited that were deployed overseas in Kuwait, Afghanistan, Qatar, or 
Iraq. Specifically, while soldiers in these units were eligible to 
receive their pays and allowances tax free when they first arrived in-
theater, almost all failed to receive this benefit until at least a 
month after arrival. Over-and underpayment of active duty pays and 
allowances for soldiers deployed in designated combat zones adversely 
impacted the accuracy and timeliness of soldiers' combat zone tax 
exclusion benefits.

Establishing the exact amount owed and collecting overpayments of 
active duty pays and allowances erroneously provided to soldiers placed 
an additional administrative burden on both the individual soldiers and 
DOD. Soldiers were sometimes required to spend considerable time and 
were frustrated in their efforts to determine the exact sums owed or to 
establish a repayment plan. For example, it took one soldier over a 
year and about 20 phone calls, e-mails, and faxes to identify and 
resolve the active duty overpayments and related tax benefits he 
received. In other instances, we identified soldiers who received 
extensive improper active duty payments, sometimes for over a year, but 
who may not have contacted anyone within DOD to stop these erroneous 
overpayments. These soldiers received significant overpayments, but did 
not acknowledge their receipt or set aside sufficient funds to repay 
these erroneous overpayments. In these instances, the soldiers may be 
subject to criminal prosecution. For example, we identified a soldier 
who did not mobilize with his unit, yet received over $36,000 in active 
duty pay and allowances for over a year. When questioned, the soldier 
stated he was not aware that he had received $36,000 in erroneous pay 
and could not immediately pay back all the erroneous active duty 
overpayments he received. We referred this, and other similar cases, to 
the Army's Criminal Investigation Division for further investigation 
into whether criminal prosecution of these soldiers may be warranted 
for attempting to fraudulently convert government funds to personal 
use.

Further, these overpayment debts placed an additional labor-intensive 
burden on the Army and DFAS. Determining the exact amounts soldiers 
owed as a result of overpayments, particularly when the combat zone tax 
exclusion benefits were involved, required labor-intensive efforts to 
gather necessary supporting documentation (in some instances from 
multiple locations) and compare these data with pay and tax 
withholdings, sometimes spanning more than 1 year, to manually compute 
amounts owed as a result of erroneous overpayments. In addition, DFAS 
was required to track and monitor collections from soldiers against 
these debts. Collection of these debts may become more difficult the 
longer they remain outstanding. For example, Army auditors reported in 
2003 that, to the extent that soldiers leave the Army with outstanding 
debts, collection rates are only about 40 percent.[Footnote 12]

Examples of pay and allowance problems found through our audits of 
soldiers' pay experiences at the eight case study units included the 
following: 

* Forty-seven soldiers deployed overseas with the 824th Quartermaster 
Company from North Carolina improperly received several months of 
hardship duty pay, totaling about $30,000, for several months after 
they left Kuwait.

* Nine soldiers of the 824th Quartermaster Company improperly received 
family separation allowance payments totaling an estimated $6,250 while 
serving at Fort Bragg, their unit's home station.

* Forty-nine soldiers with the 824th Quartermaster Company did not 
receive the hardship duty pay they were entitled to receive when they 
arrived at their designated duty locations overseas until about 3 
months after their arrival. Subsequently, they continued to erroneously 
receive hardship duty pay for 5 consecutive months after departure from 
their overseas duty locations.

* Ten soldiers with the 443rd Military Police Company had problems with 
their overseas housing allowance associated with their deployment in 
Iraq, including five soldiers who were underpaid about $2,700 and seven 
who did not receive their last allowance until more than 2 months after 
their active duty tour ended.

* A soldier with the 443rd Military Police Company who demobilized from 
an active duty deployment in August 2002, subsequently received 
erroneous active duty payments of about $52,000 through May 2004. These 
erroneous payments were not detected and stopped by DOD. The soldier 
contacted us to ask for our assistance in resolving this matter.

* A soldier from the 965th Dental Company who received an emergency 
evacuation from Kuwait as a result of an adverse reaction to anthrax 
and antibiotic inoculations he received in preparing for his overseas 
deployment, continued to receive about $2,900 in improper hostile fire 
and hardship duty payments after his return from Kuwait.

* A soldier with the 3423rd Military Intelligence Detachment did not 
receive an estimated $3,000 in family separation allowance payments 
associated with his active duty mobilization.

Further, seven of our eight units were deployed overseas during their 
mobilization. Almost all the soldiers in these seven units had problems 
with the timeliness of their combat zone tax exclusion benefits. All 
the soldiers at our seven case study units who were deployed overseas 
experienced problems with the late receipt of their combat zone tax 
benefits because DJMS-RC could not simply stop withholding federal 
taxes, but instead had to first withhold the taxes and then in the 
following month's pay processing, reimburse the soldier the taxes 
previously withheld. As a result, soldiers generally did not benefit 
from the tax exemption for at least one month after their tax 
withholdings should have ceased. In addition to this systemic issue, we 
identified other problems associated with these benefits with respect 
to the soldiers at our case study units: 

* Twenty of the 20 soldiers with the 948th Forward Surgical Team waited 
over 2 months after they arrived in Afghanistan to benefit from the 
combat zone tax exclusion.

* It took nearly a year to identify and resolve a $1,100 overpayment 
associated with one soldier's combat zone tax exclusion benefit.

* Several soldiers with Maryland's 443rd Military Police Company never 
received the correct amount of reimbursement for taxes withheld, which 
sometimes resulted in underwithholding taxes, and other times resulted 
in overwithholding taxes.[Footnote 13]

These pay mistakes were the source of many complaints, took 
considerable time and effort to address, and were likely to have had an 
adverse effect on soldier morale. In addition, soldiers at one of our 
case study units told us that a delay in receiving their active duty 
pays and allowances created financial hardship for them and their 
families. Specifically, several of the unit's soldiers told us they 
could not pay their bills when they were initially deployed overseas 
and were forced to borrow money from friends and relatives in order to 
meet their financial obligations.

We provided data on the pay problems we identified to Army Reserve 
officials. For the most part, they concurred with our analysis and 
reported that they have taken action to address any identified over-and 
underpayments and withholdings we identified. Appendixes II through IX 
provide a more detailed description of the pay experiences of the 
soldiers at each of the Army Reserve case study units we audited.

Significant Weaknesses Exist in Mobilized Army Reserve Pay Processes: 

The pay problems we found were caused, at least in part, by design 
weaknesses in the extensive, complex set of processes and procedures 
relied on to provide active duty pays, allowances, and related tax 
benefits to mobilized Army Reserve soldiers. We identified issues with 
the procedures in place for both determining eligibility and processing 
related transactions of active duty pay to mobilized Army Reserve 
soldiers. These process weaknesses involve not only the finance and 
military pay component of the Army, Army Reserve, and DFAS, but the 
Army's operational and personnel functions as well. Specifically, we 
found deficiencies in processes for (1) tracking and maintaining 
accountability over soldiers as they moved from location to location to 
carry out their mobilization orders, (2) carrying out SRPs--primarily 
at the mobilization stations, (3) distributing and reconciling key pay 
and personnel reports during mobilizations, and (4) determining 
eligibility for the family separation allowance associated with active 
duty mobilizations.

Flaws in Procedures for Tracking and Maintaining Accountability over 
Soldiers throughout Mobilization: 

Mobilization policies and procedures did not provide the Army with 
effective accountability and visibility over soldiers' locations to 
provide reasonable assurance of accurate and timely payments for Army 
Reserve soldiers' active duty mobilizations. Accountability breakdowns 
can occur as soldiers pass through four main transitions during the 
course of a typical mobilization cycle, including transitions from (1) 
their home station to their designated mobilization station, (2) the 
mobilization station to their assigned deployment location, (3) the 
deployment location to their demobilization station, and (4) the 
demobilization station back to their home station.

Soldiers' active duty pays, allowances, and related tax benefits are 
directly tied to being able to account for soldiers' locations during 
these transitions. For example, timely data on the dates soldiers 
arrive at and leave designated locations are essential for accurate and 
timely hardship duty pays, allowances, and related combat zone tax 
exclusion benefits. To effectively account for soldiers' movements 
during these transitions, unit commanders, unit administrators, as well 
as individuals assigned to personnel and finance offices across the 
Army Reserves, Army mobilization stations, and in-theater Army 
locations must work closely and communicate extensively to have the 
necessary data to pay Army Reserve soldiers accurately and on time 
throughout their active duty tours.

However, we identified several critical flaws in the soldier 
accountability procedures in place during the period of our audit. 
Specifically, we identified flawed procedures for accountability over 
soldiers' actual locations and associated pay entitlements in that (1) 
soldiers received mobilization orders, but did not report for active 
duty and (2) dates of soldiers' arrival at, and departure from, 
designated hardship duty deployment locations were not reported. Such 
breakdowns in accountability procedures resulted in erroneously 
starting, or delays in starting, active duty pays, allowances, and 
related tax benefits, and erroneously continuing these pays, allowances 
and benefits when soldiers were no longer entitled to receive them.

Mobilization Station Accountability: 

Effective procedures were not in place to monitor and validate the 
propriety of active duty payments to mobilized reservists. We found 
that preventive controls for initiating and stopping active duty 
payments for Army Reserve soldiers were ineffective. In addition, the 
accountability controls in place at Army stations responsible for unit 
mobilization and demobilization processing were not effective in 
detecting any Army Reserve soldiers assigned to units passing through 
those locations who were not entitled to receive active duty pays and 
allowances. As a result of these control design flaws, we found several 
soldiers who received up to a year of active duty payments based on 
issued mobilization orders, even though the soldiers never reported for 
active duty. Army officials have acknowledged that active duty payments 
are increasingly vulnerable to such overpayments as a result of the 
Army Reserve's November 2003 action to extend Army Reserve soldiers on 
active duty at that time for another year.

When a unit is called to active duty, soldiers in the mobilized unit 
receive individual mobilization orders. Processing procedures provide 
that these orders be used as a basis for initiating active duty pays 
and allowances to begin on the first day of active duty designated in 
the individual active duty mobilization orders. The Reserve Pay Center, 
located at Fort McCoy, is generally responsible for initiating active 
duty pays and allowances based on the data shown on a hard copy of the 
individual orders. However, the Reserve Pay Center did not receive the 
data necessary to identify, on a unit-by-unit basis, which soldiers 
reported to the active Army mobilization stations so that this 
information could be compared with a list of soldiers for that unit for 
whom the Reserve Pay Center started active duty pays and allowances. In 
addition, Army mobilization station finance personnel did not receive a 
list of soldiers in a unit who were receiving active duty pay to 
compare with the names of unit soldiers who actually reported to the 
mobilization station.

At one of our case study units, the 965th Dental Company, we found that 
this process flaw resulted in tens of thousands of dollars in 
overpayments.

Individual Case Illustration: Flawed Soldier Location Accountability 
Procedures Result in $36,000 Erroneous Active Duty Payments; 

A soldier assigned to the 965th Dental Company received a mobilization 
order, but based on a discussion with his commander about a medical 
condition, was told he would be transferred to a unit that was not 
mobilizing. However, the unit commander did not provide a list of the 
unit's mobilizing soldiers to the Reserve Pay Center and did not 
provide any information on this soldier indicating that he would not 
be reporting to the unit's mobilization station. Consequently, neither 
the Reserve Pay Center nor the mobilization station personnel had any 
means of detecting that a soldier had not mobilized with his unit and 
therefore was improperly receiving active duty payments. As a result, 
the soldier's pay was started on February 11, 2003, and continued 
through February 29, 2004, resulting in more than $36,000 in 
overpayments. This improper active duty pay was stopped only after we 
identified the error and notified Army officials.

[End of table]

In another instance, the Army's inability to determine that one 
soldier's actual location did not match his "paper" mobilization 
resulted in an estimated $52,000 in erroneous payments.

Individual Case Illustration: Soldier Accountability Flaws Lead to 
Estimated $52,000 in Erroneous Active Duty Payments; 

A soldier contacted GAO in March 2004 to inquire as to why he had been 
receiving active duty pay for almost a year even though, according to 
the soldier, he was not mobilized to active duty during that time. 
Subsequent inquiry determined that, at least on paper, the soldier was 
transferred from Maryland's 443rd Military Police Company to 
Pennsylvania's 307th military police company in February 2003, and was 
mobilized to active duty with that unit on March 3, 2003. 
Applicable active duty pays and allowances for the soldier were 
initiated based on these March 3, 2003, orders. After the 307th 
Military Police Company demobilized in February 2004, the soldier's 
mobilization order was revoked. Nonetheless, available pay 
documentation indicated the soldier continued receiving erroneous 
active duty pay and allowances for basic pay, and allowances for 
subsistence, housing, and family separation totaling an estimated 
$52,000 through May of 2004.

[End of table]

In addition, Army Reserve officials told us about similar cases at 
other units not included in our case studies in which soldiers did not 
report for active duty, but nonetheless received erroneous active duty 
pay for lengthy periods. They told us they identified soldiers who 
received large improper active duty payments, some of whom had received 
erroneous active duty payments for over a year before they were 
identified and stopped, as the following examples illustrate: 

* A soldier from an Army Reserve chemical unit in South Carolina 
received an individual mobilization order in February 2003, but did not 
mobilize with the unit. Nonetheless, her active duty pays and 
allowances (a total of over $45,000) continued until they were stopped 
in April 2004.

* A soldier from a Louisiana Army Reserve unit received an individual 
mobilization order in January 2003. However, the unit commander 
determined the soldier should not be mobilized with the unit because he 
had not yet completed required training. Nonetheless, the soldier 
received active duty pays and allowances totaling over $25,000 until 
they were stopped in March 2004.

* A soldier attached to a Puerto Rico Quartermaster Reserve unit was 
mobilized in February 2003, but did not report for active duty. The 
soldier continued to receive improper active duty pays and allowances 
totaling about $36,000 until the payments were stopped in April 2004.

* A soldier assigned to an Illinois Reserve Military Police Company 
received an individual mobilization order in December 2002. However, 
she did not report to the mobilization station with her unit and her 
mobilization order was revoked in January 2003. Nonetheless, the 
soldier continued to receive active duty pay and allowances totaling 
about $24,000 until the payments were stopped in April 2004.

Army Reserve officials told us that these improper payments were not 
identified through any systemic preventive accountability control 
process associated with an active duty mobilization or demobilization, 
but rather as a result of after the fact detective controls in place at 
the unit or the Army Reserve pay center. For example, one soldier 
reported for a weekend drill and the unit pay administrator attempted 
to enter a transaction to pay him for weekend drill duties. However, 
the unit pay administrator discovered the soldier's receipt of 
erroneous active duty payments when the weekend drill pay transaction 
was rejected by DJMS-RC. Army Reserve officials told us they have 
referred these improper payments to the Army's Criminal Investigations 
Division to determine if criminal prosecution of the soldiers involved 
may be warranted.

Deployment Accountability: 

Flaws in soldier accountability procedures associated with overseas 
deployment locations resulted in late, under-, and overpayments of 
active duty pays, allowances, and tax benefits associated with almost 
all the soldiers in our case study units. Soldiers were generally paid 
late or underpaid location-based incentives upon their initial arrival 
into designated hardship duty and hostile fire locations. Subsequently, 
they were often overpaid these same location-based entitlements because 
these payments continued, sometimes for long periods of time, after 
soldiers left designated overseas locations. These failures occurred 
because Army procedures in place during our audit were ineffective in 
accounting for when soldiers entered into and departed from designated 
hardship duty and hostile fire locations. In addition, as discussed in 
a subsequent section of this report, automated systems deficiencies 
also contributed to, and in some cases exacerbated, location-based 
active duty pay problems.

According to DFAS procedures, Army local area servicing finance 
locations are to obtain documentation showing soldier and associated 
arrival and departure date information to start and stop location-based 
pays, allowances, and associated tax benefits. We were told that flight 
manifest lists generated through the Army's Tactical Personnel System 
were the primary source documents used as a basis for entering manual 
transactions to start and stop location-based pays during most of our 
audit period.

One of our case study units, the 443rd Military Police Company, relied 
on an extraordinary, labor-intensive workaround to ensure that 
necessary documentation supporting any changes in the location of the 
unit's soldiers, as well as other pay-support documentation, was 
received by the unit's area servicing finance office while the soldiers 
were deployed in Iraq.

Individual Case Illustration: Biweekly Flights to Transmit Unit Pay 
Documents; 

While deployed to guard Iraqi prisoners at Camp Cropper in Iraq, the 
unit commander of the 443rd Military Police Company assigned a sergeant 
to help address myriad pay complaints. The sergeant was deployed to 
Iraq as a cook, but was assigned to assist in pay administration for 
the unit because he was knowledgeable in DJMS-RC procedures and pay-
support documentation requirements and was acquainted with one of the 
soldiers assigned to the unit's servicing finance office in Camp 
Arifjan, Kuwait. Every 2 weeks, for about 5 months, the sergeant 
gathered relevant pay-support documentation from the unit's soldiers, 
took a 1 hour and 15 minute flight to the Kuwait airport, and then 
drove an hour to the Army finance office at Camp Arifjan. The day 
following the sergeant's biweekly journey to Camp Arifjan, the sergeant 
worked with the Army finance officials at Camp Arifjan to enter 
transactions into DMO, often for 8-12 hours, to get unit soldiers' pay 
entitlements started or corrected, particularly hardship duty pay 
requiring manual input every month.

[End of table]

However, despite diligent efforts by Army local area servicing finance 
officials to develop and maintain accurate lists of soldiers at the 
designated deployment locations, our analysis of payments to soldiers 
at our case study units indicated that this information was often not 
timely or accurate. Finance officials at the Army area servicing 
finance offices either did not obtain manifests (documentation showing 
soldier arrival and departure dates) at all, received the documentation 
late (often months after the unit's actual arrival or departure dates), 
or obtained manifests listing soldiers that should not have been 
included for pay purposes. For example, an Army Reserve soldier 
assigned to support Air Force operations did not process through, or 
have any access to, an Army location that could provide a manifest 
showing his arrival date in-country to local Army area servicing 
finance office officials so that they could start his location-based 
pays. In this case, the soldier did not receive his location-based pays 
until he returned to his demobilization station and insisted that 
personnel at that location take the actions necessary to start this 
payment. Also, we were told that soldiers departing from designated 
locations on emergency or rest and recreation leave, who are still 
entitled to continue to receive designated location-based pays while on 
such leave, were sometimes erroneously included on departure manifests 
used as source documents to stop active duty location-based pays.

These flawed procedures, which were relied on to account for Army 
Reserve soldiers' actual locations and their related pay entitlements 
while deployed, resulted in pay problems in all seven of our case study 
units that deployed soldiers overseas, as the following examples 
illustrate: 

* All 49 soldiers that deployed overseas with our 824th Quartermaster 
Company case study unit were underpaid their hardship duty pay when 
they first arrived in the country. Subsequently, almost all soldiers in 
the unit were overpaid their hardship duty pay---most for up to 5 
months--after they left the designated location, and some continued to 
receive these payments even after they were released from active duty. 
In total, we identified about $30,000 in improper hardship duty 
payments received by this unit's soldiers.

* Seventy-six soldiers with the 965th Dental Company received improper 
hardship duty payments totaling almost $47,000 after they had left 
their hardship duty location.

* Ten soldiers with the 431st Chemical Detachment received improper 
hardship duty payments for 7 months after their return to their home 
station.

* None of the 24 soldiers deployed with the 629th Transportation 
Detachment received hardship duty pay for the months they arrived and 
departed the hardship duty areas. In addition, they did not receive 
hostile fire pay for almost 3 months after their arrival at their 
assigned overseas deployment locations.

The debts created by overpayment of these location-based payments 
placed an additional administrative burden on both the soldiers and the 
department to calculate, monitor, and collect the corrected amounts.

Lack of Clear Pay Review Procedures at Mobilization Stations: 

Some of the pay problems we found were associated with flawed 
procedural requirements for the pay support review, which is part of 
the SRP process carried out at Army mobilization stations. Procedures 
followed by Army mobilization station finance officials during the SRP 
were inconsistent with respect to what constitutes a "thorough review" 
of soldiers' pay support documentation to determine if it is current 
and complete and has been entered into the DJMS-RC pay system.

Procedures followed for our 824th Quartermaster Company case study unit 
at the Fort Bragg mobilization station provided that the pay support 
portion of the SRP at that location consisted of finance 
representatives briefing the entire unit on required pay support. 
Finance personnel did not meet individually with each soldier to 
compare his or her pay support documentation with on-line soldier pay 
data in DJMS-RC. As a result, missing or outdated documentation 
required to support active duty pays and allowances at the time of the 
824th Quartermaster Company's SRP contributed to some of the late 
payments we identified. For example, one soldier with this unit who was 
certified as ready for mobilization as a result of the SRP, did not 
receive entitled family separation allowance payments because 
documentation necessary to start this allowance was not submitted as 
part of the SRP process. Six months later, after the soldier 
demobilized at Fort Bragg, the paperwork necessary to receive this 
allowance was obtained and submitted for payment. This soldier received 
about 6 months of back family separation allowance in September 2003 
totaling $1,400.

We also found indications that the pay support documentation review 
carried out at the Army's Fort Lee mobilization station was less than 
thorough. Personnel at the Fort Lee mobilization station did not carry 
out a detailed review of Master Military Pay Account records, which 
would have shown that soldiers with the unit would stop receiving their 
entitled housing allowances and family separation allowances because 
there were incorrect end dates for these payments entered into DJMS-RC. 
As a result, several soldiers from the 443rd Military Police Company 
had their basic allowance for housing switched to a rate less than the 
soldiers were entitled to receive and had their family separation 
allowance stopped for a period during their deployment because the Fort 
Lee mobilization station finance personnel did not take action 
necessary to extend the end-of-eligibility dates for these two 
entitlements.

In contrast, pay support documentation review procedures in place as 
part of the SRP at the Army's mobilization stations at Fort McCoy and 
Fort Eustis provided that, in addition to a unitwide finance briefing, 
finance officials at those sites were to conduct one-on-one pay support 
documentation reviews with each soldier. Members of the 948th Forward 
Surgical Team, who mobilized through Fort McCoy, and the 629th 
Transportation Detachment, who processed through Fort Eustis, had their 
pay records reviewed and compared to DJMS-RC on-line records by finance 
officials during the finance portion of their SRP. We found very few 
problems with either the 948th or 629th units' active duty pay 
entitlements, excluding in-theater entitlements, after these units 
passed through the one-on-one soldier pay documentation review as part 
of the SRP at Fort McCoy and Fort Eustis.

Inadequate Processes in Place for Reconciling and Distributing Key Pay 
and Personnel Reconciliation Reports: 

Design flaws in the procedures in place to obtain and reconcile key pay 
and personnel reports impaired the Army's ability to detect improper 
active duty payments. As discussed previously, we identified several 
cases and the Army has also identified a number of instances in which 
such improper payments continued for over a year without detection.

The reserve pay review and validation procedures for Army Reserve 
soldiers were initially designed to service reservists as they perform 
weekend drills, annual training, and short-term active duty 
mobilizations of 30 days or fewer. Correspondingly, pay and personnel 
reconciliation processes in place during our audit were focused 
primarily on requirements for unit commanders to reconcile data for 
reserve soldiers while they are in an inactive (drilling reservist) 
status. However, as illustrated by the pay problems discussed in this 
report, there is an equal or even greater need to clearly establish 
required procedures for the review and reconciliation of pay and 
related personnel data for Army Reserve soldiers mobilized on extended 
active duty tours.

Specifically, with respect to the monthly review and reconciliation of 
two key reports, the Pay/Personnel Mismatch Report and the Unit 
Commander's Pay Management Report,[Footnote 14] current procedures 
contained in USARC Pamphlet 37-1 provide that unit commanders are 
required to review the Unit Commander's Pay Management Report for 
soldiers in their units on weekend drill activities and for active duty 
mobilization planning activities. However, these procedures do not 
clearly require unit commanders to review this key report for Army 
Reserve soldiers in subsequent phases of their active duty mobilization 
tours. Appendix I of USARC Pamphlet 37-1 provides that unit pay data in 
the Unit Commander's Pay Management Report should be reconciled with 
unit training and attendance reports, but does not require reconciling 
pay data with related data on mobilized soldiers. As a result, the unit 
commander at one of our case study units, the 965th Dental Company, 
stated that he did not believe that a review and reconciliation was 
needed. Instead, he stated he relied on the unit's soldiers to identify 
any pay problems. In light of the extensive manual entry, and 
nonintegrated systems currently relied on for mobilized Army Reserve 
soldiers' pay, the timely and complete reconciliation of comparable pay 
and personnel data in these key reports can serve as an important 
detective control to identify any pay errors shortly after they have 
occurred.

In addition, Army guidance does not specify how deployed units are to 
receive these reports. Distribution of these reports is particularly 
problematic for units deployed in remote locations overseas. As a 
matter of practice, we found that for units in an inactive status, the 
unit's Regional Readiness Command usually provides these reports. 
However, we also found no procedural guidance in place to distribute 
the same reports to unit commanders and administrators while their 
units are on active duty. Unit commanders for several of our case study 
units stated they did not receive these key reports while their units 
were deployed. Had those reports been available and reconciled, they 
could have been used to identify and correct improper active duty 
payments, such as the large, erroneous active duty overpayments 
discussed previously.

Procedures for Applying Family Separation Allowance Eligibility 
Requirements Were Not Clear: 

The existing procedures for applying eligibility requirements for 
activated Army Reserve soldiers' family separation allowance payments 
were not clear. These flawed procedural requirements for paying the 
family separation allowance led to varying interpretations and pay 
errors for Army Reserve soldiers at the implementing Army home stations 
and mobilization stations.

DOD Financial Management Regulation (FMR) Volume 7A policy clearly 
provides that soldiers are entitled to receive a family separation 
allowance if their family does not reside near the duty station, which 
is generally defined as within 50 miles.[Footnote 15] However, DOD 
procedures and the form needed to implement this FMR policy were not 
clear. Implementing guidance and DD Form 1561 (a document that must be 
completed to receive the family separation allowance) do not provide 
for a determination that a soldier's family does not live near the 
soldier's duty station. Specifically, DD Form 1561 does not 
specifically require soldiers to certify that the soldier is entitled 
to receive family separation allowance benefits because (1) they live 
over 50 miles away from the unit's home station and do not commute 
daily or (2) the soldier's commander has certified that the soldier's 
required commute to the duty station is not reasonable. We noted that 
in several of our case study units, soldiers began receiving the family 
separation allowance while stationed in Army installations less than 50 
miles away from their residence and without any documentation showing 
the unit commander's determination that the soldier's commute, even 
though within 50 miles, was nonetheless, unreasonable. For example, 
soldiers from the 824th Quartermaster Company received family 
separation allowance payments while stationed at their Fort Bragg home 
station, even though they lived within 50 miles of the base and no 
documentation was available showing that the unit commander authorized 
an exception. In contrast, 14 soldiers with Maryland's 443rd Military 
Police Company who lived over 50 miles away from their home station, 
including several soldiers from Puerto Rico, did not receive a family 
separation allowance as of the date of their arrival at their home 
station.

Human Capital Issues Affect Pay Accuracy and Timeliness: 

Human capital weaknesses also contributed to the pay problems mobilized 
Army Reserve soldiers experienced in our eight case study units. Our 
Standards for Internal Control in the Federal Government states that 
effective human capital practices are critical to establishing and 
maintaining a strong internal control environment, including actions to 
ensure that an organization has the appropriate number of employees to 
carry out assigned responsibilities. Even in an operational environment 
supported by a well-designed set of policies and procedures and a 
world-class integrated set of automated pay and personnel systems, an 
effective human capital strategy--directed at ensuring that sufficient 
numbers of people, with the appropriate knowledge and skills, are 
assigned to carry out the existing extensive, complex operational 
requirements--is essential. Such a human capital strategy supporting 
accurate and timely active duty payments to mobilized Army Reserve 
soldiers must encompass potentially hundreds of DOD components that are 
now involved in carrying out the extensive coordination, manual 
intervention, and reconciliations required to pay mobilized Army 
Reserve soldiers.

Well-trained pay-support personnel throughout various DOD components 
are particularly critical given the extensive, cumbersome, and labor-
intensive process requirements that have evolved to provide active duty 
payments to mobilized Army Reserve soldiers. We encountered many 
sincere and well-meaning Army, Army Reserve, and DFAS personnel 
involved in authorizing and processing active duty payments to these 
soldiers. The fact that mobilized Army Reserve soldiers received any of 
their entitled active duty pays, allowances, and tax benefits 
accurately and on-time is largely due to the dedication and tireless 
efforts of many of these pay-support personnel to do the right thing 
for these mobilized Army Reserve soldiers. However, in conjunction with 
our case studies, we observed human capital weaknesses related to (1) 
inadequate resources provided to support unit-level pay management, (2) 
inadequate pay management training across the spectrum of pay-support 
personnel, and (3) customer service breakdowns.

Inadequate Resourcing for Critical Unit Administrator Positions: 

Vacancies and turnovers in key unit administrator positions, and the 
deployment of unit administrators to fill other military requirements, 
impaired a unit's ability to carry out critical pay administration 
tasks that could have prevented or led to early detection of pay 
problems associated with our case study units. In addition to pay 
administration responsibilities, unit administrator duties include 
personnel and supply operations. We were told that vacancies in unit 
administrator positions were difficult to fill and often remained 
vacant for many months because Army policy requires the individual 
filling the unit administrator position to have a dual status, which 
means the individual must perform duties both in the capacity of an 
Army Reserve military occupation specialty as well as unit 
administrator.

For example, at the 948th Forward Surgical Team, the unit administrator 
position was vacant prior to and during the unit's mobilization. We 
were informed that the 948th Forward Surgical Team had difficulty 
filling the vacancy because of its dual status. Specifically, the unit 
officials stated that this position was difficult to fill because the 
individual must have a medical background to meet the dual status 
requirement. That is, the person filling the position must be able to 
meet the unit's mission requirements as well as have knowledge and 
experience performing the personnel, payroll, and supply tasks of a 
unit administrator. In the absence of a unit administrator, the unit 
commander assigned a sergeant with limited knowledge of pay 
entitlements and DJMS-RC processing requirements to help carry out some 
of the unit administrator's pay management duties. The sergeant told us 
that during a 2-week period during late April 2003, she spent about 100 
hours attempting to resolve the unit's pay problems, while concurrently 
carrying out her duties as a health specialist.

Providing adequate resources to support the execution of critical pay 
management responsibilities was particularly problematic for Army 
Reserve soldiers that were cross-leveled (transferred) to other units 
and mobilized to active duty with those units. For three of the four 
case study units we audited where small groups of Army Reserve soldiers 
were transferred and mobilized to active duty with another unit, we 
found that these soldiers experienced pay problems that could be 
attributed, at least in part, to inadequate resources to carry out 
critical unit-level pay management responsibilities. For example, 
because he did not have any unit-level support to assist in processing 
his active duty payments, a soldier who was mobilized as a single-
soldier unit did not receive any location-based active duty pays until 
he returned from Qatar.

Inadequate Pay Management Training: 

In addition to concerns about the level of resources provided to 
support critical unit administrator positions, we identified instances 
in which the lack of adequate unit administrator and finance office 
personnel training on pay management duties and responsibilities 
contributed to the soldiers' pay problems we identified. In addition, 
we found that unit commanders did not always support these important 
pay management duties. Our Standards for Internal Control in the 
Federal Government provides that management should establish and 
maintain a positive and supportive attitude toward internal controls 
and conscientious management.

Several of the individuals serving as unit administrators in our case 
study units informed us that they had received limited or no formal 
training covering unit administrator responsibilities and that the 
training they did receive did not prepare them for mobilization issues 
associated with supporting and processing active duty pays and 
allowances. Unit administrators have responsibility for a variety of 
pay-related actions, including working with the unit soldiers to obtain 
critical pay support documentation, maintaining copies of pay support 
records, providing pay-transaction support documentation to the Reserve 
Pay Center, and reviewing pay reports for errors. Without adequate 
training, unit administrators may not be aware of these critical pay 
management responsibilities.

Few unit administrators at our case study units had completed all of 
the required training on active duty pay and allowance eligibility and 
processing requirements. While unit administrators are required to 
attend two courses (each lasting 2 weeks),[Footnote 16] few of the unit 
administrators for our case study units took the required training at 
or near the time they assumed these important pay management and other 
key unit administrator duties. For example, the unit administrator at 
one of our case study units, the 824th Quartermaster Company, stated 
she had not attended any formal training courses, but instead received 
on-the-job training. Our audit showed that she did not always 
effectively carry out her pay management report review 
responsibilities. For example, while our audit of unit pay reports 
showed she reviewed the documents, we saw no indication she used this 
tool to identify and stop an overpayment of $18,000 to one soldier in 
her unit. As a result, the erroneous pay was allowed to continue for 
another 5 months.

At other units, we identified instances in which available 
documentation indicated that unit administrators did not take timely 
action to submit pay-support transactions. For example, several 
soldiers with the 965th Dental Company did not receive promotion pay 
increases and other entitlements for over 2 months because the unit 
administrator failed to process necessary pay-support documentation, 
available at the time of the unit's initial SRP, until the unit was 
already deployed on active duty. At the 443rd Military Police Company, 
we found the unit's finance sergeant[Footnote 17] assigned pay 
management responsibilities did not gather and submit current 
documentation needed to support active duty pays and allowances, 
including current documents showing soldiers' marital status and number 
of dependents. As a result, soldiers from the 443rd Military Police 
Company experienced over-, under-, and late payments associated with 
their housing and cost of living allowances.

In addition to inadequate unit administrator training, inadequate 
training of military pay technicians at Army finance offices at 
mobilization stations, area servicing finance offices (for deployed 
soldiers), and demobilization stations adversely affected the accuracy 
and timeliness of payments to mobilized Army Reserve soldiers. Few of 
the military finance personnel responsible for processing pays and 
allowances at the mobilization and demobilization stations and at the 
area servicing finance offices for deployed units had formal training 
on DJMS-RC pay procedures. Instead, several of the military pay 
technicians and supervisors we talked to at the Army mobilization and 
demobilization stations told us they relied primarily on on-the-job 
training to become knowledgeable in the pay eligibility and pay 
transaction processing requirements for mobilized Army Reserve 
soldiers. For example, military pay personnel at the Defense Military 
Pay Office at Fort Eustis informed us that they did not receive any 
formal training on active duty pay entitlements or DJMS-RC pay 
processing before assuming their assigned responsibilities for 
mobilization and demobilization pay processing. Instead, they stated 
they became knowledgeable in mobilization and demobilization pay 
processing procedures by processing hundreds of soldiers within 2 to 3 
weeks of being assigned these responsibilities. They also said they 
contacted full-time civilians in the finance office, as well as Reserve 
Pay Center and DFAS officials, by telephone for assistance.

Also, few of the Army finance personnel at overseas area servicing 
finance offices were adequately trained in active duty pay entitlements 
and processing procedures for mobilized Army Reserve soldiers. 
Specifically, these key personnel with responsibility for location-
based active duty payments to mobilized Army Reserve soldiers deployed 
in Kuwait and Iraq and surrounding areas did not receive formal 
training on pay eligibility and DJMS-RC processing requirements before 
assuming their duties. USARC Pamphlet 37-1 provides that an Army in-
theater servicing finance office has primary responsibility for 
supporting active duty payments to mobilized Army Reserve soldiers when 
a reserve unit is deployed overseas. Camp Arifjan was the Army location 
assigned responsibility for processing active duty payments to 
mobilized Army Reserve soldiers deployed in Kuwait and Iraq during 
2003. Officials from the 336th Command, the Army command with oversight 
responsibility for Camp Arifjan, confirmed that while finance personnel 
at Camp Arifjan received training in the pay eligibility and pay 
processing procedures for active duty Army soldiers, they were not 
adequately trained in pay eligibility issues of Army Reserve soldiers.

We were told of instances in which Army finance personnel were unable 
to help reserve soldiers resolve their pay problems. For example, the 
948th Forward Surgical Team contacted an Army finance unit located in 
Kandahar, Afghanistan, to request its assistance in resolving the 
unit's pay problems. However, the finance personnel at that location 
were unable to help resolve the 948th Forward Surgical Team's pay 
problems because they said they had not had training in this area and 
were not familiar with DJMS-RC processing requirements and procedures. 
All 20 soldiers with the 948th Forward Surgical Team experienced pay 
problems associated with their location-based payments related to their 
deployment in Afghanistan, including hardship duty pay. These payments 
require manual entry every month by the unit's area servicing finance 
office.

Further, we saw little evidence that the unit commanders of our case 
study units received any training for their role in supporting their 
unit administrators in these important pay management responsibilities. 
For example, at one of our case study units, the 965th Dental Company, 
the unit commander informed us that he did not support the review of 
pay management reports because soldiers had the capability to review 
their pay online and would use this capability to identify and report 
any pay problems. However, as discussed previously, we identified a 
number of instances in which soldiers did not identify or report that 
they received thousands of dollars in improper active duty payments.

Customer Service Breakdowns: 

Our audit work at eight case study units identified significant soldier 
concerns with both the level and quality of customer service they 
received related to their active duty pays, allowances, and tax 
benefits. The soldiers' concerns centered around three distinct areas: 
(1) the accessibility of customer service, (2) the ability of customer 
service locations to help soldiers, and (3) the treatment of soldiers 
requesting assistance. Servicing soldiers and their families with pay 
inquiries and problems is particularly critical in light of the error-
prone processes and limited automated system processing capabilities. 
Ultimately, pay accuracy is left largely to the individual soldier.

Although there are several sources that soldiers can turn to for pay 
issue resolution, soldiers at our case study units experienced problems 
in accessing these sources. Sources that soldiers can contact include 
their home unit, the military pay section of the cognizant RRC, the 
mobilization/demobilization station, the designated active Army area 
servicing finance office in-theater, the online myPay system, and the 
1-888-PAY-ARMY (729-2769) toll-free number. However, mission 
requirements and the distance between deployment locations and field 
finance offices often impaired the soldiers' ability to utilize the in-
theater customer service centers. Also, soldiers did not always have 
Internet and telephone access to use the myPay system or to contact 
customer service sources such as 1-888-PAY-ARMY, the home unit, or the 
cognizant RRC. The lack of Internet access for deployed soldiers was 
particularly problematic because it limited soldiers' access to pay, 
allowance, and tax benefit data reflected in their leave and earnings 
statements. Lacking leave and earnings statements, soldiers had no 
means to determine the propriety of their active duty payments. For 
example, soldiers with the 948th Forward Surgical Team told us that 
their inability to access the leave and earnings statements adversely 
affected their overall morale.

Even when mobilized reservists were able to contact customer service 
sources, their pay issues often continued because the office they were 
instructed to contact was unable to address their inquiry or correct 
their problem. In some cases, customer service sources failed to help 
soldiers because they lacked an understanding of what was needed to fix 
the problems. When representatives of the 948th Forward Surgical Team 
contacted their parent company for help in correcting pay problems, 
personnel with the parent company informed them that they could not fix 
the unit's pay problems because they (incorrectly) believed that the 
unit was paid through the Army's active duty Army system. Soldiers at 
other units were redirected from one source to another. Soldiers were 
not aware of which sources could address which types of problems, and 
more significantly, the customer service sources themselves often did 
not know who should correct a specific problem.

An Army Reserve major's experience illustrates the time and frustration 
that was sometimes involved with soldiers' attempts to obtain customer 
service for correcting errors in active duty pays, allowances, and 
related tax benefits.

Individual Case Illustration: Extensive, Time-consuming Action 
Required to Resolve Pay Issue; 

A soldier from Maryland was mobilized in March 2003 from the Army's 
Individual Ready Reserve to active duty to serve as a liaison between 
the Army and Air Force to help coordinate ground and air combat 
operations in Iraq. After completing his 2-month active duty tour and 
returning to an inactive reserve status in May 2003, he contacted Army 
officials to inform them that he was continuing to receive active duty 
payments and volunteered to immediately repay these erroneous 
overpayments. In July 2003, he wrote a check for $6,150.75 after 
receiving documentation showing his debt computation. However, he 
continued to receive Leave and Earnings Statements indicating that he 
had an outstanding debt. He contacted his Army demobilization finance 
office to determine how to get the erroneous outstanding debt removed 
from his pay records. After being referred by officials at that 
location to various DFAS locations (including once being told, "There 
is nothing more I can do for you."), he contacted us for assistance. 
After DFAS recomputed the soldier's debt as a result of our inquiry, 
the soldier was informed that he owed an additional $1,140.54, because 
the original debt computation did not fully consider the erroneous 
combat zone tax exclusion benefits he received. Overall, he spent 
nearly a year after his 2-month active duty tour ended, and about 20 
phone calls, faxes, and letters in contacting at least seven different 
DOD representatives at five different customer service centers to 
correct active duty pay and allowance overpayments and associated 
combat zone tax exclusion benefit problems.

[End of table]

Finally, soldiers expressed concern about the treatment they sometimes 
received while attempting to obtain customer service. Soldiers felt 
that certain customer service representatives did not treat soldiers 
requesting assistance with respect. For example, one soldier who 
attempted to make corrections to his DD Form 214, Certificate of 
Discharge or Release from Active Duty, informed us that mobilization 
station personnel told him that the citations and dates of service he 
was trying to add "didn't matter" and that he could fix them later. 
Additionally, some soldiers told us that while they raised concerns 
about the quality of customer service they received with respect to 
their pay inquiries and concerns, they were sometimes ignored. For 
example, soldiers with Connecticut's 3423rd Military Intelligence 
Detachment told us that while they contacted the local Inspector 
General when they believed that finance personnel at their deployment 
location had both actively tried to impair the payment of their active 
duty entitlements and had tried to intimidate and discourage the unit's 
soldiers from seeking help elsewhere, they were not aware of any action 
taken as a result of their concerns. As a result, soldiers with the 
unit told us they believed they had no recourse but to accept the poor 
treatment they believed they received.

Automated Systems Deficiencies Constrain Accurate and Timely Payments: 

Weaknesses in automated systems contributed significantly to the 
underpayments, overpayments, and late payments we identified. These 
weaknesses consisted of (1) nonintegrated systems with limited system 
interfaces and (2) limited processing capabilities within the pay 
system. The Army and DFAS rely on the same automated pay system to 
authorize and process active duty payments for Army Reserve soldiers as 
they use for Army National Guard soldiers. In addition, similar to the 
Army National Guard, the Army Reserve's personnel and order-writing 
systems are not integrated with the pay system. Consequently, many of 
the systems problems experienced by mobilized Army Reserve soldiers 
were similar to those that we identified in our report on pay issues 
associated with mobilized Army National Guard soldiers.[Footnote 18]

Because of the automated systems weaknesses, both Army Reserve and 
active Army personnel must put forth significant manual effort to 
accurately process pays and allowances for mobilized Army Reserve 
soldiers. Moreover, to compensate for the lack of automated controls 
over the pay process, both DFAS and the Army place substantial reliance 
on the review of pay reports to identify pay errors after the fact. 
Part of this reliance includes the expectation that soldiers review 
their own leave and earnings statements, even though these statements 
do not always provide clear explanations of all payments made. Finally, 
because of DJMS-RC's limitations, the system cannot simply stop 
withholding taxes for soldiers in designated combat zone locations. 
Instead, for these soldiers, the system withholds taxes and then 
reimburses the soldiers the amount that should not have been withheld 
at least a month after the soldiers were first entitled to receive this 
benefit.

Automated Systems Are Not Integrated and Have Limited Interfaces: 

The key pay and personnel systems involved in authorizing, entering, 
processing, and paying mobilized Army Reserve soldiers are not 
integrated and have only limited interfaces. Figure 2 provides an 
overview of the key systems involved in authorizing, entering, 
processing, and making active duty payments to mobilized Army Reserve 
soldiers.

Figure 2: Key Systems Involved in Authorizing, Entering, Processing, 
and Paying Mobilized Army Reserve Soldiers Are Not Effectively 
Integrated or Interfaced: 

[See PDF for image] 

[A] Regional Level Application System (RLAS)
[B] Tactical Personnel System (TPS) 
[C] Transition Processing (TRANSPROC) System 
[D] Defense Military Pay Office (DMO) 
[E] Total Army Personnel Database - Reserve (TAPDB-R) 
[F] Defense Joint Military Pay System - Reserve Component (DJMS-RC): 

[End of figure]

Lacking either an integrated or effectively interfaced set of personnel 
and pay systems, DOD must rely on error-prone, manual data entry from 
the same source documents into multiple systems. In an effectively 
integrated system, changes to personnel records automatically update 
related payroll records from a single source of data input. While not 
as efficient as an integrated system, an automatic personnel-to-payroll 
system interface can also reduce errors caused by repetitive manual 
data entry into more than one system.

Because of the lack of effective integration or interfaces[Footnote 19] 
among key personnel and pay systems, pay-affecting data recorded in the 
personnel system are not automatically updated in the pay system. 
Therefore, pay-affecting personnel changes recorded in the personnel 
system must be re-entered into the pay system from hard copies of 
documents, such as soldiers' mobilization orders. We found numerous 
instances in which pay-affecting personnel information was not entered 
promptly into the pay system, resulting in numerous pay errors.

Individual Case Illustration: Overpayment due to Lack of Integrated 
Personnel and Pay Systems; 

A soldier assigned to an Illinois Military Police Company received a 
mobilization order in December 2002 to report to Fort Dix, New Jersey. 
Data from her individual mobilization order were entered into DJMS-RC 
and she began receiving active duty pays and allowances based on the 
active duty mobilization date shown in her mobilization order. 
However, her mobilization order was revoked in early January 2003 
after she was found to be ineligible for mobilization. But, because of 
the lack of integration or an effective interface between personnel 
and pay systems, this order was not automatically processed in DJMS-RC 
to stop the soldier's active duty pay. Consequently, the soldier was 
overpaid from December 2002 through May 2004. Overpayments to the 
soldier totaled over $24,000.

[End of table]

We found several instances in which soldiers that were promoted while 
on active duty did not receive their pay raises when they should have 
because the promotion information was not promptly recorded in DJMS-RC. 
For example, one Army Reserve soldier's promotion was effective on July 
1, 2003. However, the soldier's promotion was not processed in the pay 
system until October 2003, which delayed an increase in both his basic 
pay and basic allowance for housing. The soldier finally received his 
promotion pay, including back pay, in late October 2003, resulting in 
late payments totaling over $2,700.

Lacking an effective interface between pay and personnel systems, DOD 
and the Army must rely on after-the-fact detective controls, such as 
pay and personnel system data reconciliations, to identify and correct 
pay errors occurring as a result of mismatches between personnel 
(TAPDB-R) and pay system (DJMS-RC) data. In this regard, the Army 
Reserve has an automated reconciliation tool--the Participation 
Management and Reporting Subsystem (PMARS)--to help identify data 
inconsistencies between pay and personnel systems. Specifically, the 
Army Reserve uses PMARS to identify mismatches of soldiers accounted 
for in one system and not in the other, and to compare the systems' 
information on individual soldiers, such as their ranks and dates of 
service. However, this tool is not effective in identifying soldiers 
that are being paid for active duty while in inactive status because 
TAPDB-R currently does not capture and maintain this information.

Although TAPDB-R maintains a "deployability" code, this code does not 
necessarily indicate whether or not a soldier is on active duty. If 
TAPDB-R included a code that specifically identified soldiers on active 
duty, then the PMARS comparison of TAPDB-R data with DJMS-RC data could 
help identify those soldiers improperly receiving active duty pay.

Limited Automated Processing Capabilities: 

DJMS-RC was not designed to pay Army Reserve soldiers for active duty 
tours longer than 30 days. According to DOD officials, requiring DJMS-
RC to process various types of pays and allowances for active duty 
tours that exceed 30 days has stretched the system's automated 
processing capabilities to the limit. Because of the system's 
limitations, the Army and DFAS were required to make repetitive manual 
inputs for certain active duty pays, such as hardship duty pay. We 
found many instances in which these manual inputs resulted in payment 
errors. Moreover, because of the way in which hardship duty pay was 
processed, mobilized Army Reserve soldiers could not always determine 
whether they received all of their entitled pays and allowances. In 
addition, under current processing limitations, DJMS-RC does not 
process a required tax exclusion promptly for soldiers in a combat 
zone, which has resulted in late payments of this benefit for all 
entitled Army Reserve soldiers.

Hardship Duty Pay: 

During our audit period, we found numerous errors in hardship duty pay 
as a result of a DJMS-RC processing limitation that required the use of 
a miscellaneous payment code for processing this type of pay. Because 
of the use of this miscellaneous code instead of a code specifically 
for hardship duty pay, this pay could not be automatically generated on 
a monthly basis once a soldier's eligibility was established. 
Therefore, hardship duty pay had to be manually input every month for 
eligible soldiers. As previously discussed, reliance on manual 
processing is more prone to payment errors than automated processing.

We found that nearly all soldiers in our case studies who were eligible 
for hardship duty pay experienced problems with this pay, including 
late payments, underpayments, and overpayments. For example, the 965th 
Dental Company's soldiers at Seagoville, Texas, experienced both 
underpayments and overpayments. Specifically, all 85 soldiers deployed 
to Kuwait were underpaid a total of approximately $8,000 for hardship 
duty pay they were entitled to receive during their deployment 
overseas. Subsequently, 76 of the unit's soldiers were overpaid a total 
of almost $47,000 because they continued to receive hardship duty 
payments for more than 6 months after they had left the designated 
hardship duty location.

Both underpayments and overpayments, as well as late payments, of 
hardship duty pay occurred largely because of the reliance on manual 
processing of this pay every month. The errors often occurred because 
local area servicing finance office personnel did not receive accurate 
or timely documentation such as flight manifests or data from the 
Tactical Personnel System indicating when soldiers arrived or left the 
designated hardship duty location. As a result, finance personnel did 
not start these payments on time, and did not stop these payments as of 
the end of the soldiers' active duty tour date recorded in DJMS-RC.

The DJMS-RC system processing limitation that led to using the systems' 
miscellaneous code to process hardship duty pay, also contributed to 
overpayments of this active duty pay. That is, finance personnel 
mistakenly continued to manually enter transactions to process hardship 
duty pay to soldiers beyond soldiers' end of active tour dates because 
DFAS had no way of implementing a system edit that could identify and 
stop erroneous hardship duty pay while permitting other types of 
transactions processed using this code to continue.

Similarly, no edit was in place to prevent duplicate payments of 
hardship duty pay. As a result, hardship duty pay could be entered more 
than once for a soldier in a given month without detection. From our 
case studies, we identified three soldiers who each received two 
hardship duty payments for one month. None of these duplicate payments 
was identified or collected until we submitted inquiries about these 
soldiers' payments to the Reserve Pay Center. In addition, we were told 
that soldiers had difficulty determining that they received duplicate 
hardship duty payments because this type of payment was not clearly 
identified on their leave and earnings statement.

Use of the miscellaneous payment code also made it difficult for 
soldiers to understand, and determine the propriety of, some of the 
payments reflected on their leave and earnings statements. Hardship 
duty pay and other payments that are processed using the miscellaneous 
payment code are reported on leave and earnings statements as "other 
credits." Furthermore, the leave and earnings statements did not 
provide any additional information about what the "other credits" were 
for unless pay clerks entered additional explanations in the "remarks" 
section of the statement, which they rarely did. As a result, soldiers 
often had no means to determine if these types of payments were 
accurate.

Unit commanders told us that they relied on soldiers to identify any 
pay problems based on their review of their leave and earnings 
statements. However, because leave and earnings statements do not 
always provide adequate information or are not available to soldiers 
while they are deployed, reliance on the soldiers to identify pay 
errors is not an effective control.

Combat Zone Tax Exclusion: 

In addition to soldiers' pay problems that occurred primarily because 
of the extensive use of manual processes, soldiers also experienced 
systematic problems with automated payments related to their combat 
zone tax exclusion, which resulted in late payments of this benefit for 
all soldiers in the seven case study units that deployed overseas. 
Soldiers are entitled to the combat zone tax exclusion for any month in 
which the soldier performs active service in a designated combat zone 
area.[Footnote 20] For any applicable month, this benefit applies to 
the entire month, rather than being prorated based on the number of 
days the soldier was in the combat zone.

However, because DJMS-RC was designed as a pay system for inactive Army 
Reserve soldiers, it does not have the processing capability to suspend 
withholding of federal and state income taxes applicable to pay that is 
ordinarily taxable. Instead, as a workaround procedure to compensate 
for this limitation, the system first improperly withholds taxes 
applicable to payments made while soldiers are in a combat zone, then 
later reimburses soldiers for these withheld amounts in the following 
month. For example, when an Army Reserve soldier is assigned to a 
location where he is entitled to receive tax-free active duty pays, 
DJMS-RC (improperly) withholds taxes from at least the soldier's first 
one or two active duty payments. Subsequently, during the first pay 
cycle of the following month, DJMS-RC reimburses the soldier for the 
amount of taxes improperly withheld during the previous month. As a 
result of this workaround process, all Army Reserve soldiers who served 
in a combat zone received their combat zone tax exclusion benefit at 
least one month late.

DJMS-RC processing limitations cause further delays in soldiers' 
receipt of entitled combat zone tax benefits when soldiers arrived in a 
combat zone after the midmonth cutoff, which is approximately on the 
7th day of each month. In these cases, entitlement to the tax exclusion 
is not recognized until the following month, which then delays the 
soldier's receipt of his combat zone tax benefit until the next month-
-the third month the soldier is deployed in the combat zone. For 
example, members of the 824th Quartermaster Company that deployed to 
Afghanistan arrived in country on July 14, 2003, but did not receive 
their first combat zone tax exclusion reimbursements until early 
October, almost 3 months after they became eligible for the exclusion.

Recent Actions Should Result in Improvements: 

DOD and the Army have reported a number of relatively recent positive 
actions with respect to processes, human capital practices, and 
automated systems that, if implemented as reported, should improve the 
accuracy and timeliness of active duty pays, allowances, and related 
tax benefits provided to mobilized Army Reserve soldiers. The accuracy 
and timeliness of payments to mobilized Army Reserve soldiers rely on 
many of the same processes and automated systems used for payments to 
mobilized Army National Guard soldiers. Consequently, actions to 
improve the accuracy and timeliness of Army Reserve soldier payments 
are closely tied to actions taken in response to several of the 
recommendations in our November 2003 Army National Guard pay 
report.[Footnote 21]

Because many of DOD's actions in this area were implemented in the fall 
of 2003 or later, they were not in place soon enough to have had a 
positive impact on mobilized Army Reserve soldiers' payments as of the 
January 2004 cutoff for the soldier pay data we audited. However, if 
implemented as reported to us, many of DOD's actions in response to our 
November 2003 report recommendations should help reduce the incidence 
of the types of pay problems we identified for Army National Guard 
soldiers as well as those identified in the Army Reserve case study 
units discussed in this report.

With respect to the process deficiencies and related recommendations, 
DOD reported implementing additional procedural guidance intended to 
help minimize the pay problems attributable to nonstandard or unclear 
procedures. For example, in June 2004, the Army issued a comprehensive 
"Finance Mobilization and Demobilization Standing Operating 
Procedure." This guidance clarified pay management responsibilities and 
transaction processing requirements to be followed for all Army Reserve 
and Army National Guard soldiers mobilized to active duty. One of the 
purposes of this guidance is to eliminate any questions regarding which 
DOD entity is responsible for resolving a soldier's pay issues or 
questions. Further, as of January 2004, DOD reported establishing a new 
procedure under which DFAS assumed responsibility (from the Army 
finance offices located in various overseas locations) for all monthly 
manual entry of mobilized Army Reserve and Army National Guard 
soldiers' location-based hardship duty pay.

DOD also reported completing several actions related to our previous 
recommendations to improve the human capital practices related to 
payments to mobilized Army soldiers. For example, the Army reported 
that it had taken action to provide additional training for Army 
finance personnel at overseas finance locations, mobilization and 
demobilization stations, and for those Army finance personnel scheduled 
for deployment. This training is directed at better ensuring that these 
personnel are adequately trained on existing and new pay eligibility 
and pay processing requirements for mobilized Army National Guard and 
Army Reserve soldiers. DOD also reported establishing a new policy in 
January 2004 directed at more clearly affixing responsibility for 
addressing soldiers' pay problems or inquiries. Under this new policy, 
the Army National Guard established a pay ombudsman to serve as the 
single focal point for ensuring coordinated, prompt customer service on 
all Army National Guard soldiers' pay problems. Thus far, DOD's 
reported actions have not yet addressed, and consequently we are 
reiterating, our previous human capital recommendations with respect to 
(1) requiring unit commanders to receive training on the importance of 
adhering to requirements to carry out monthly pay management 
responsibilities, and (2) modifying existing training policies and 
procedures to require active Army pay and finance personnel who are 
responsible for entering pay transactions for mobilized reserve 
component soldiers to receive appropriate training upon assuming such 
duties.

With respect to automated systems, the Army and DFAS have acknowledged 
serious deficiencies in the current automated systems used to pay 
mobilized Army Reserve soldiers, and report that they have implemented 
a number of significant improvements, particularly to reduce an 
estimated 67,000 manual monthly entries for hardship duty pay. For 
example, in response to our recommendations in the Army National Guard 
report, DOD reported taking actions to (1) automate manual monthly 
hardship duty pay in April 2004, (2) eliminate the use of the 
miscellaneous code for processing hardship duty pay and instead process 
these payments using a unique transaction code to facilitate 
implementing a system edit to identify and stop erroneous payments, (3) 
compare active duty release dates in the Army's system used to generate 
Release From Active Duty orders with soldiers' end of active duty tour 
dates shown in DJMS-RC to identify and stop any erroneous active duty 
pays, and (4) increase the reliability and timeliness of documentation 
used to support soldiers' arrival at and departure from designated 
overseas locations.

However, DOD has not yet fully addressed, and consequently we are 
reiterating two of our previous recommendations directed at interim 
automated system improvements and one of our longer-term system 
improvement recommendations. Specifically, we are reiterating previous 
interim recommendations related to evaluating the feasibility of (1) 
using the personnel-to-pay interface as a means to proactively alert 
pay personnel of actions needed to start active duty pays and 
allowances and (2) establishing an edit check and requiring approval 
before processing any payments above a specified dollar amount.

DOD has a major system enhancement effort under way in this area--the 
Defense Integrated Military Human Resources System (DIMHRS). As an 
interim measure, DOD is now pursuing Forward Compatible Payroll (FCP). 
FCP is intended to replace payroll systems now used to pay Army 
military personnel and help eliminate several of the labor-intensive, 
error-prone workarounds necessitated by current DJMS-RC processing 
limitations. As of May 2004, FCP was expected to be operational for all 
Army Reserve soldiers by March 2005.

We are also reiterating our previous longer term recommendation with 
respect to taking action to ensure that DIMHRS and related efforts 
include a complete reengineering of not only the related automated 
systems, but the supporting processes and human capital practices used 
to pay mobilized Army Reserve soldiers as well. Such fundamental 
reengineering is necessary because, as discussed in the preceding 
sections, many of the pay problems we found were associated with 
procedural and human capital practice issues, as well as nonintegrated 
automated systems that extend beyond existing pay system processing 
limitations.

Conclusions: 

The increased operating tempo for Army Reserve and Army National Guard 
active duty mobilizations has stressed the current processes, human 
capital, and automated systems relied on to pay these soldiers. The 
significant number of problems we identified associated with active 
duty pays, allowances, and related tax benefits provided to mobilized 
Army Reserve soldiers at eight case study locations raises serious 
concerns about whether current operations can be relied on to provide 
accurate and timely payments. These pay problems caused considerable 
frustration, adversely affected soldiers' morale, and placed an 
additional, unnecessary burden on both the soldiers and their families. 
Further, if not effectively addressed, these pay problems may 
ultimately have an adverse impact on Army Reserve reenlistment and 
retention.

Strengthening existing processes, human capital practices, and 
automated systems is critical to preventing, or at minimum, promptly 
detecting and correcting, the errors we identified. In this regard, DOD 
and the Army have reported a number of relatively recent positive 
actions intended to improve the accuracy and timeliness of active duty 
pays, allowances, and related tax benefits provided to mobilized Army 
Reserve soldiers. DOD's completed and planned near-term actions, if 
implemented as reported, should reduce the number of pay problems. 
However, mobilized Army Reserve soldiers cannot be reasonably assured 
of accurate and timely active duty pays, allowances, and related tax 
benefits until DOD completes a reengineering of all the processes, 
human capital practices, and automated systems supporting this critical 
area.

Fully and effectively addressing Army Reserve soldiers' pay problems 
will require priority attention and sustained, concerted, coordinated 
efforts by DFAS, the Army, and the Army Reserve to build on actions 
taken and planned. For these reasons, we are reaffirming two of our 
previous human capital-related recommendations and three of our 
previous automated systems-related recommendations from our November 
2003 report on payments to mobilized Army National Guard soldiers. 
However, we are also offering 15 additional recommendations identified 
as a result of our audit of mobilized Army Reserve soldiers' pay 
experiences.

Recommendations for Executive Action: 

We recommend that the Secretary of the Army, in conjunction with the 
Under Secretary of Defense (Comptroller), take the following 15 actions 
to address the issues we found with respect to the existing processes, 
personnel (human capital), and automated systems relied on to pay 
activated Army Reserve soldiers.

Process: 

* Establish procedures for unit commanders and unit administrators, or 
other designated officials (for soldiers transferred between units), to 
reconcile the names of Army Reserve soldiers receiving active duty pay 
with the names of Army Reserve soldiers reporting for duty at 
mobilization stations.

* Establish procedures for unit commanders and unit administrators, or 
other designated officials, to provide the names and arrival dates for 
all soldiers entering and exiting in-theater locations to a designated 
area servicing finance office to facilitate accurate and timely payment 
of in-theater location-based active duty pays, allowances, and related 
tax benefits.

* Establish procedures to provide demobilization stations with a list 
of soldiers returning from overseas that are scheduled to arrive at the 
demobilization station for outprocessing.

* Establish procedures to reconcile the names of Army Reserve soldiers 
who recently demobilized with the names of Army Reserve soldiers still 
receiving mobilization pay and take appropriate action to resolve any 
identified pay issues.

* Clarify policy concerning "thorough" review of soldiers' pay records 
upon initial mobilization to specify that finance personnel at Army 
mobilization stations must conduct a one-on-one review of online pay 
records for each mobilized soldier.

* Establish procedures to ensure unit commanders and unit 
administrators, or other designated officials, have online access to 
pay management reports, such as the Unit Commander's Pay Management 
Report, particularly for mobilized units.

* Clarify DJMS-RC procedures to specifically require unit commanders, 
unit administrators, or other designated officials to review and 
reconcile key pay and personnel data every month, including personnel 
records, with the monthly Unit Commander's Pay Management Report, for 
all mobilized Army Reserve soldiers.

* Clarify and simplify procedures and forms implementing the family 
separation allowance entitlement policy, particularly with respect to 
the 30-day waiting period and commuting distance criteria.

Human Capital: 

* Take appropriate action to address the issues of inadequate resources 
provided to carry out key unit administrator pay management 
responsibilities identified at our case study units, particularly with 
respect to (1) vacancies in unit administrator positions resulting from 
the requirement for dual status unit administrators and (2) lack of pay 
management support for Army Reserve soldiers transferred between units.

* Determine whether issues of inadequate resources identified at our 
case study units apply to other mobilized Army Reserve units and 
soldiers, and if so, take appropriate action to address any 
deficiencies identified.

* Evaluate the feasibility of establishing an ombudsman to serve as the 
single focal point and have overall coordination responsibility and 
visibility to ensure that all Army Reserve soldiers' problems and 
inquiries with respect to applicable active duty pays, allowances, and 
related combat zone tax exclusion benefits are promptly and fully 
resolved.

Systems: 

Interim Improvements to Current Automated Systems: 

* Evaluate the feasibility of modifying the deployability code or 
adding a duty status code in TAPDB-R that can be compared with the pay 
status code field in DJMS-RC to assist in identifying pay errors 
resulting from discrepancies between the soldiers' duty status and pay 
status.

* Evaluate the feasibility of modifying DJMS-RC to suspend withholding 
taxes from soldiers when they serve in designated tax-exempt combat 
zones.

* Evaluate the feasibility of establishing a system edit to prevent 
DJMS-RC from generating payments for active duty service to soldiers 
after their date of demobilization from active duty.

Longer-Term Systems Action: 

* Address the deficiencies noted in this report as part of the 
functional requirements for the FCP and DIMHRS system development 
efforts currently under way.

Agency Comments and our Evaluation: 

In its written comments, DOD concurred with our recommendations and 
stated its actions to address the identified deficiencies. 
Specifically, DOD's response outlined some actions already taken, 
others that are under way, and further planned actions with respect to 
our recommendations. If effectively implemented, these actions should 
substantially resolve the deficiencies pointed out in our report. DOD's 
comments are reprinted in appendix X.

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from its date. At that time, we will send copies of the report to 
interested congressional committees. We will also send copies of this 
report to the Secretary of Defense; the Under Secretary of Defense 
(Comptroller); the Secretary of the Army; the Director of the Defense 
Finance and Accounting Service; and the U.S. Army Reserve Command. We 
will make copies available to others upon request. In addition, the 
report will be available at no charge on the GAO Web site at 
[Hyperlink, http://www.gao.gov]. If you or your staffs have any 
questions regarding this report, please contact me at (202) 512-9095 or 
[Hyperlink, kutzg@gao.gov] or Geoffrey Frank, Assistant Director, at 
(202) 512-9518 or [Hyperlink, frankg@gao.gov].

Signed by: 

Gregory D. Kutz: 
Director, Financial Management and Assurance: 

List of Congressional Requesters: 

The Honorable Tom Davis: 
Chairman: 
Committee on Government Reform:
House of Representatives: 

The Honorable Christopher Shays: 
Chairman: 
Subcommittee on National Security, Emerging Threats, and International 
Relations: 
Committee on Government Reform: 
House of Representatives: 

The Honorable Todd Platts: 
Chairman: 
Subcommittee on Government Efficiency and Financial Management: 
Committee on Government Reform: 
House of Representatives: 

The Honorable Ed Schrock: 
House of Representatives: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To obtain an understanding and assess the processes, personnel (human 
capital), and systems used to provide assurance that mobilized Army 
Reserve soldiers were paid accurately and on time, we reviewed 
applicable laws, policies, procedures, and program guidance; observed 
pay processing operations; and interviewed cognizant agency officials. 
The key laws, policies, and procedures, we obtained and reviewed 
included: 

* 10 U.S.C. Section 12302;

* DOD Directive Number 1235.10, "Activation, Mobilization & 
Demobilization of the Ready Reserve;" 

* DOD FMR, Volume 7A, "Military Pay Policy and Procedures Active Duty 
and Reserve Pay;" 

* USARC Regulation 37-1, "Financial Administration: USAR Financial 
Management and USAR Support;" 

* USARC Pamphlet 37-1, "Defense Joint Military Pay System - Reserve 
Component (DJMS-RC) Procedures Manual;" 

* Army Regulation 600-8-101, "Personnel Processing (In-, Out-, Soldier 
Readiness, Mobilization, and Deployment Processing);" 

* the Army's Consolidated Personnel Policy Guidance for Operations 
Noble Eagle and Enduring Freedom, September 2002; and: 

* Army Forces Command Regulations: 

* 500-3-3, Reserve Component Unit Commander's Handbook;

* 500-3-4, Installation Commander's Handbook; and: 

* 500-3-5, Demobilization Plan.

We also reviewed various Under Secretary of Defense memorandums, a 
memorandum of agreement between Army and DFAS, and DFAS, Army, Army 
Forces Command, and Army Reserve Command guidance applicable to pay for 
mobilized reserve component soldiers. We also used the internal control 
standards provided in the Standards for Internal Control in the Federal 
Government.[Footnote 22]

We applied the policies and procedures prescribed in these documents to 
the observed and documented procedures and practices followed by the 
various DOD components involved in providing active duty pay to Army 
Reserve soldiers. We also interviewed officials from USARC, RRCs, Army 
Reserve Regional Readiness Commands, Army Central Command, Army and DOD 
military pay and personnel offices, Army Finance Command, DFAS, and 
unit commanders and unit administrators to obtain an understanding of 
their experiences in applying these policies and procedures. From these 
interviews, we also obtained information on examples of recent 
mobilized Army Reserve pay problems they encountered in the course of 
their work.

In addition, as part of our audit, we performed a review of selected 
edit and validation checks in DJMS-RC. Specifically, we obtained 
documentation and performed walk-throughs associated with DJMS-RC edits 
performed on pay status/active duty change transactions, such as those 
to ensure that tour start and stop dates matched MMPA dates and that 
the soldier cannot be paid basic pay and allowances beyond the stop 
date that was entered into DJMS-RC. We also obtained documentation on 
and performed walk-throughs of the recently implemented personnel-to-
pay system interface process, the order writing-to-pay system interface 
process, and on the process for entering mobilization information into 
the pay system. We did not independently test DOD's reported edit and 
validation checks in DJMS-RC, but we held interviews with officials 
from U.S. Army Reserve Headquarters, Army Finance Command, and DFAS-
Indianapolis to supplement our documentation and walk-throughs.

Because our preliminary assessment determined that current operations 
used to pay mobilized Army Reserve soldiers relied extensively on 
error-prone manual entry of transactions into multiple, nonintegrated 
systems, we did not statistically test current processes and controls. 
Instead, we used a case study approach to provide a more detailed 
perspective of the nature of any deficiencies in the three key areas of 
processes, people (human capital), and automated systems relied on to 
pay mobilized Army Reserve soldiers. Specifically, we gathered 
available data and analyzed the pay experiences of Army Reserve 
soldiers mobilized to and demobilized from active duty in support of 
Operations Noble Eagle, Enduring Freedom, and Iraqi Freedom during the 
period from August 2002 through January 2004. We audited the pay 
experiences of soldiers in the following eight Army Reserve units as 
case studies of the effectiveness of the processes, human capital 
practices, and automated systems in place over active duty pays, 
allowances, and related tax benefits: 

* 824th Quartermaster Company, Fort Bragg, N.C.

* 965th Dental Company, Seagoville, Tex.

* 948th Forward Surgical Team, Southfield, Mich.

* 443rd Military Police Company, Owings Mills, Md.

* FORSCOM Support Unit, Finksburg, Md.

* 629th Transportation Detachment, Fort Eustis, Va.

* 3423rd Military Intelligence Detachment, New Haven, Conn.

* 431st Chemical Detachment, Johnstown, Pa.

From the population of Army Reserve units mobilized and demobilized 
between August 2002 and January 2004, we selected units from various 
specialties that represented the wide variety of missions performed by 
the Army Reserve during wartime. These case studies are presented to 
provide a more detailed view of the types and causes of any pay 
problems experienced by these units as well as the financial impact of 
pay problems on individual soldiers and their families.

We used mobilization data supplied by the Army Reserve Headquarters 
Operations Center to assist us in selecting the eight units we used as 
our case studies. We did not independently verify the reliability of 
the Operations Center database. We used the data to select RRCs that 
had a large number of activated Reserve units that had mobilized, 
deployed, and returned from their tour of active duty in support of 
Operations Noble Eagle, Enduring Freedom, and Iraqi Freedom. From the 
list of units assigned to these Readiness Commands, we selected our 
eight case studies that had a variety of deployment locations and 
missions, including both overseas and continental U.S. deployments. In 
addition to our case studies, during our visits to Army mobilization 
locations, we interviewed small numbers of soldiers currently in the 
process of returning from active duty to obtain their perspectives on 
their experiences with active duty pays, allowances, and related tax 
benefits.

We also obtained testimonial data from soldiers at several of our case 
study units. We asked numerous soldiers at these units to discuss pay-
related experiences during their deployment. The information we 
obtained during these interviews is presented to provide further 
insight into the pay experiences of Army Reserve soldiers who were 
mobilized under current military operations, but is not intended to be 
representative of the views of all soldiers in their units nor of those 
of Army Reserve soldiers overall.

We used DJMS-RC pay transaction extracts for the period from August 
2002 through January 2004 to identify pay problems associated with our 
case study units. However, we did not perform an exact calculation of 
the net pay soldiers should have received in comparison with what DJMS-
RC records show they received. Rather, we used available documentation 
and follow-up inquiries with cognizant personnel at the Army Reserve 
Command, Regional Readiness Commands, and the Reserve Pay Center at 
Fort McCoy, Wisconsin, to determine if (1) soldiers' entitled active 
duty pay and allowances were received within 30 days of their initial 
mobilization date, (2) soldiers were paid within 30 days of the date 
they became eligible for active duty pay, allowances, and entitlements 
associated with their deployment locations, and (3) soldiers stopped 
receiving active duty pay and allowances as of the date of their 
demobilization from active duty. For the pay problems we identified, we 
counted them as problems only in the phase (mobilization, deployment, 
and demobilization) in which they first occurred even if the problems 
persisted into other phases. For purposes of characterizing pay and 
allowance problems for this report, we defined overpayments and 
underpayments as those that were in excess of (overpayment) or less 
than (underpayment) the entitled payment. We considered as late 
payments any active duty pay or allowance paid to the soldier over 30 
days after the date on which the soldier was entitled to receive such 
payments. As such, these payments were those that, although late, 
addressed a previously unpaid entitlement. We used available data 
through February 2004, as well as dollar amounts reported by Reserve 
Pay Center officials, to determine collections against identified 
overpayments through February 2004. In addition, while we did not 
attempt to calculate the exact impact of any soldier's over-, under-, 
and late payments on their combat zone tax exclusion benefits, we did 
examine readily available data to determine the extent to which our 
case study unit soldiers' received their entitled combat zone tax 
exclusion benefits.

Our audit results only reflect problems we identified. Soldiers in our 
case study units may have experienced additional pay problems that we 
did not identify. Further, our work was not designed to identify, and 
we did not identify, any fraudulent pay and allowances to any mobilized 
Army Reserve soldiers. However, to the extent we identified any 
problems with our case study unit soldiers' active duty pays, 
allowances, tax benefits, and related collections, we provided 
documentation showing the results of our analysis to appropriate Army 
Reserve officials for a complete review of all soldier pay records to 
determine whether, and take appropriate action if, additional amounts 
are owed to the Army Reserve soldiers or to the government.

We briefed officials of the DOD Comptroller, Army Finance Command, Army 
Reserve Command, Army Reserve Regional Readiness Commands, Army Forces 
Command, and DFAS-Indianapolis on the details of our audit, including 
our findings and their implications. On July 9, 2004, we requested 
comments on a draft of this report. We received comments on August 11, 
2004, from the Under Secretary of Defense (Comptroller) and have 
summarized those comments in the section of this report entitled 
"Agency Comments and Our Evaluation." DOD's comments are reprinted in 
appendix X. We conducted our audit from November 2003 through June 2004 
in accordance with U.S. generally accepted government auditing 
standards.

[End of section]

Appendix II: 824th Quartermaster Company, Fort Bragg, North Carolina:

Beginning on February 2, 2003, the 824th Quartermaster Company was 
called to active duty for up to a year in support of Operation Enduring 
Freedom. A total of 68 soldiers from the 824th Quartermaster Company 
mobilized at Fort Bragg, North Carolina, and went through in-processing 
at Fort Bragg's mobilization station in the first few weeks of 
February. Over the next several months, members of the unit performed 
their mission of rigging parachutes for individual soldiers and large 
equipment drops at Fort Bragg, in Afghanistan, and in and around 
Kuwait. On April 6, 2003, 44 members of the 824th Quartermaster Company 
deployed to Kuwait to assist in parachute preparations. After 
completing their mission, the soldiers returned to Fort Bragg 2 months 
later on June 19. Another 5 soldiers from the unit deployed to 
Afghanistan on July 14 and performed similar parachute rigging duties, 
returning to Fort Bragg on September 1, 2003. The other 19 soldiers in 
the unit remained at Fort Bragg for the entire duration of their tour 
of duty where they assisted in parachute rigging at the base. Beginning 
on July 15, 2003, soldiers in the 824th Quartermaster Company began to 
demobilize and return to their civilian jobs, and by the end of 
September 2003, all but one soldier had been released from active duty. 
The soldier that remained on active duty was receiving medical 
treatment for injuries related to his military service. A time line of 
actions associated with the unit's active duty mobilization is shown in 
figure 3.

Figure 3: 824th Quartermaster Company's Mobilization Time Line:

[See PDF for image]

[End of figure]

As summarized in table 4, at every stage of the unit's tour of active 
duty, soldiers experienced a variety of pay problems. Fifty-eight of 
the 68 soldiers in the 824th Quartermaster Company experienced at least 
one pay problem associated with their activation to, during, or 
deactivation from active duty in support of Operation Enduring Freedom. 
Specifically, (1) we found that 11 soldiers experienced underpayments, 
overpayments, or late payments during their initial mobilization; (2) 
50 soldiers experienced underpayments, overpayments, or late payments 
during their tour of active duty at Fort Bragg, in Afghanistan, and in 
and around Kuwait, including in-theater incentives such as hostile fire 
pay; and (3) 13 soldiers experienced underpayments, overpayments, and/ 
or late payments associated with their demobilization, with most of the 
problems relating to the continuation of active duty pay after 
demobilization.

Table 4: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 11 of 68.

Phase: Deployment; 
Number of soldiers with pay problems: 50 of 68.

Phase: Demobilization; 
Number of soldiers with pay problems: 13 of 68.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems in more than one 
phase.

[End of table]

The dollar amounts associated with overpayments, underpayments, and 
late payments we identified were approximately $60,000, $10,000, and 
$3,000, respectively. Of the overpayments we identified, about $2,000 
was subsequently collected from the unit's soldiers. Almost $18,000 of 
the overpayments we identified was associated with one soldier, who 
continued to receive active duty pay for more than 5 months after his 
discharge from the Army.

Mobilization Pay Problems:

As summarized in table 5, we found that 11 soldiers from the 824th 
Quartermaster Company experienced underpayments, overpayments, or late 
payments related to basic pay and associated entitlements when called 
to active duty. For example, we identified several soldiers who 
received their $250 per month family separation allowance even though 
they performed their military duty at Fort Bragg, their home station, 
and were not separated from their families as provided by the DOD FMR 
Volume 7A. The soldiers were not informed by pay technicians at the 
unit or their mobilization station that they were not entitled to the 
family separation allowance if their home of record was within a 
reasonable commuting distance, generally 50 miles, even though the 
soldiers were staying at Fort Bragg.

Table 5: Mobilization Pay Problems:

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 9.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Jump pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Prior to being mobilized, the soldiers in the 824th Quartermaster 
Company attended a SRP at their unit's home station. The purpose of 
this review was to ensure that all soldiers had all required 
administrative paperwork, financial documents, and were physically fit 
for the ensuing mobilization. Members of the 81st Regional Readiness 
Command and unit members of the 824th Quartermaster Company, who 
conducted the finance portion of the SRP, were required to verify the 
soldiers' supporting financial documentation, and, if necessary, submit 
transactions with the necessary supporting documentation to the Reserve 
Pay Center at Fort McCoy to update the soldiers' Master Military Pay 
Accounts to reflect their mobilized status. After performing the SRP at 
the unit's home station, the 824th Quartermaster Company reported to 
Fort Bragg, its active Army mobilization station. Fort Bragg personnel 
conducted a second SRP that was intended, in part, to verify each 
soldier's pay account with supporting finance documents. However, 
instead of conducting the required review of each soldier's pay record, 
Fort Bragg's finance personnel performed only a perfunctory review of 
the soldiers' supporting documents. According to finance personnel at 
Fort Bragg's mobilization station, the physical layout of the in-
processing station did not allow them to sit with each soldier "one on 
one" to compare their pay account as shown in DJMS-RC with the 
soldier's pay supporting documentation in real time.

The perfunctory review and oversights during the SRPs at the home 
station and mobilization station allowed several soldiers to receive 
FSA when they were not entitled to receive it. A review by personnel at 
the SRP should have identified that the soldiers were not separated 
from their families as required, and therefore they would not have 
signed off as approvers of the entitlement forms. A lack of adequately 
trained staff with enough time to review the unit's pay forms may have 
caused this pay error.

Missing or noncurrent documentation required to support active duty 
pays and allowances at the time of the SRP contributed to some of the 
late pays and allowance payments we identified. For example, one 
soldier did not receive family separation allowance payments because 
documentation necessary to start this allowance was not submitted as 
part of the SRP process, although the soldier was certified as ready 
for mobilization as a result of the SRP. It was 6 months later, when 
the soldiers were demobilizing at Fort Bragg, that the paperwork 
necessary to receive this allowance was submitted to the Fort Bragg 
finance office. This soldier received about 6 months of back pay in 
September 2003.

Pay Problems While Deployed:

As summarized in table 6, we identified a number of problems associated 
with the unit's active duty pays and allowances.

Table 6: Deployment Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Hostile fire pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 5; 
Number of soldiers who were underpaid: 5; 
Number of soldiers who were overpaid: 44.

Type of pay or allowance: Hardship duty pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 49; 
Number of soldiers who were overpaid: 47.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

During the soldiers' deployment to Afghanistan and Kuwait, they 
encountered pay problems related to payments for soldiers located in 
designated hardship duty locations and hostile fire zones. Most 
soldiers did not receive the full amount of hardship duty pay payments 
while deployed. In addition, they continued to receive their hardship 
duty pay well after they had returned to Fort Bragg and demobilized. 
All 49 soldiers deployed overseas were incorrectly paid for either 
hardship duty or hostile fire pay.

Army area servicing finance officials, who had responsibility for 
initiating these entitlements, did not initiate the unit's hardship 
duty pay payments until several months after the unit had arrived. The 
delay resulted in the deployed soldiers being underpaid for most of 
their time in the hardship duty location.

Local active Army finance officials also did not terminate payments of 
hardship duty pay until 5 months after the soldiers had left the 
hardship duty pay location, in most cases. This erroneous continuation 
of hardship duty payments may have been the result of pay clerks 
continuing to manually process these payments each month using a roster 
of soldiers in the country that did not properly reflect the unit's 
departure from the overseas deployment location. In addition, the DJMS-
RC system processing procedures in place at the time required that 
hardship duty pay be processed using a miscellaneous payment code that 
could be used for a variety of payments. The use of this miscellaneous 
code for hardship duty pay precluded the system from identifying the 
payments as active duty pay and therefore allowed these payments to 
continue after the soldiers were demobilized. The use of the 
miscellaneous payment code also led to soldier confusion because the 
Leave and Earning Statement did not identify the nature of the 
entitlement.

In addition, soldiers who deployed to Afghanistan told us that in some 
cases, they had trouble finding in-theater finance officers willing to 
help them with their pay problems. The soldiers stated that when they 
arrived in Afghanistan, the finance office on duty at the time was 
preparing to return to the United States because its tour in the 
country was ending. Several weeks passed before the transition of 
finance offices was complete, and in that time the Reserve soldiers did 
not have any local support that would assist them with finance 
problems. This gap in a functioning supporting finance office for the 
deployed soldiers could only have added to their frustration and 
confusion over in-theater pays.

In addition to the problems soldiers experienced related to their pay 
and entitlements, they also experienced systematic problems related to 
their combat zone tax exclusion benefits. All 49 of the soldiers from 
the 824th Quartermaster Company who deployed overseas were eligible for 
this tax benefit and all of them experienced some type of problem with 
their combat zone tax exclusion. Specifically, we found that all 49 
soldiers received their combat zone tax exclusion late, totaling about 
$20,000. Five soldiers did not receive all of the combat zone tax 
exclusion benefits they were due during their deployment. Moreover, the 
soldiers who deployed to Afghanistan did not have the combat zone tax 
exclusion applied to their pay until nearly 3 months after they arrived 
in the country, and never received their combat zone tax exclusion 
benefit for September 2003. The error for the month of September caused 
over $1,300 of extra taxes to be collected from these soldiers while in 
a combat zone.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

Soldiers of the 824th Quartermaster Company began to demobilize in July 
2003. As summarized in table 7, during their demobilization and after 
their release from active duty, soldiers continued to experience pay 
problems. These problems were primarily overpayments associated with 
soldiers receiving pay after their active duty demobilization dates.

Table 7: Demobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who were overpaid: 9.

Type of pay or allowance: Jump pay; 
Number of soldiers who were overpaid: 6.

Source: GAO analysis.

[End of table]

The largest pay problem related to the 824th Quartermaster Company's 
demobilization involved a soldier who was put into a medical hold 
company. The soldier initially mobilized with the unit in February, and 
was in-processed by personnel at Fort Bragg. During the in-processing, 
it was determined that the soldier had a medical condition that did not 
allow him to mobilize with the unit and perform his duty. He was then 
transferred to a medical holding company under the command of the Fort 
Bragg Garrison Support Unit. In this unit, the soldier underwent 
treatment for his condition and concluded that treatment in August 
2003. On August 13, 2003, the soldier was discharged entirely from the 
Army and his pay should have stopped on that date. According to DFAS 
guidance, several locations can initiate transactions to stop a 
soldier's pay. The primary location is the demobilization station where 
the soldier receives his or her DD Form 214, Certificate of Discharge 
or Release from Active Duty. As a secondary catch, the Reserve Pay 
Center at Fort McCoy can also stop the soldier's pay on his or her 
release date.

Although the soldier did out-process through Fort Bragg and received 
his DD Form 214, personnel at the demobilization station at Fort Bragg 
did not amend the soldier's pay record to cut off pay on August 13. The 
unit also did not take any action to stop the soldier's pay because the 
soldier should have been off of its pay records and in the pay records 
of the medical hold company. This had not been done and the result was 
that the medical hold company could not view the soldier's pay records 
but knew he was discharged. Meanwhile, the unit could view the pay 
records but, under current procedures, did not receive a copy of the DD 
Form 214 showing the soldier had been discharged. Ultimately, the 
soldier's pay and allowances were stopped only as a result of actions 
we took. Specifically, in August 2003, the soldier contacted his old 
unit, the 824th Quartermaster Company, and faxed them a copy of his DD 
Form 214. At this point the unit had all necessary documentation to 
identify the overpayment to the soldier after his discharge date of 
August 13, but did not review the pay records and identify the problem. 
The soldier continued to get paid until the end of January 2004 when we 
identified the error, which resulted in an overpayment of almost 
$18,000. Finally, after we brought the error to the unit's attention, 
the unit requested that the Reserve Pay Center at Fort McCoy stop the 
soldier's pay and initiate collection.

[End of section]

Appendix III: 965th Dental Company Seagoville, Texas:

On February 9, 2003, the 965th Dental Company[Footnote 23] was called 
to active duty in support of Operation Enduring Freedom for an initial 
1-year tour.[Footnote 24] The unit mobilized at its home station, 
Seagoville, Texas, on February 11, 2003, and reported for active duty 
at Fort Hood, Texas, on February 14, 2003. On March 23, 2003, the 965th 
Dental Company deployed to Camp Arifjan, Kuwait, to provide dental 
services to Army soldiers involved in military operations in Iraq and 
surrounding areas. Upon completion of its mission, the company 
redeployed from Kuwait to Fort Hood in two separate groups; the first 
group returned on May 22, 2003, and the second on June 10, 2003. Within 
a few days of returning to Fort Hood, soldiers were sent home and 
following end-of-tour leave were discharged from active duty. By the 
end of July 2003, all but three soldiers had been released from active 
duty. Two soldiers remained on active duty because they were still 
receiving medical treatment for injuries sustained during their 
deployment and one was still deployed overseas at the time of our 
review.[Footnote 25] A time line of actions associated with the unit's 
active duty mobilization is shown in figure 4.

Figure 4: 965th Dental Company's Mobilization Time Line:

[See PDF for image]

[End of figure]

As summarized in table 8, soldiers of the 965th Dental Company 
experienced various pay problems at every stage of the unit's tour of 
active duty. Overall, 89 of 93 mobilized soldiers experienced some type 
of pay problem associated with their activation to, during, or 
deactivation from, active duty in support of Operation Enduring 
Freedom. Specifically, 25 soldiers experienced underpayments, 
overpayments, or late payments associated with their initial 
mobilization; 86 experienced underpayments, overpayments, or late 
payments during their deployment to areas in and around Kuwait, 
including in-theater incentives such as hostile fire pay and hardship 
duty pay; and 7 soldiers experienced underpayments or overpayments 
associated with their demobilization, including problems related to the 
continuation of active duty pay after demobilization. One soldier 
received $36,000 of active duty pay even though he never mobilized with 
the unit. Another soldier incorrectly received hostile fire pay, 
hardship duty pay, the family separation allowance, and the combat zone 
tax exclusion benefit following his return home to recuperate from 
injuries sustained overseas.

Table 8: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 25 of 93.

Phase: Deployment; 
Number of soldiers with pay problems: 86 of 93.

Phase: Demobilization; 
Number of soldiers with pay problems: 7 of 93.

Source: GAO analysis.

Note: Soldier may have experienced pay problems in more than one phase.

[End of table]

The dollar amounts associated with overpayments, underpayments, and 
late payments we identified were approximately $100,000, $16,000, and 
$27,000, respectively. Of the overpayments we identified, about $400 
was subsequently collected from the soldiers prior to the time we 
started our audit.

Mobilization Pay Problems:

As summarized in table 9, we found that 25 soldiers from the 965th 
Dental Company experienced underpayments, overpayments, or late 
payments related to basic pay and associated entitlements during 
mobilization processing.

Table 9: Mobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 8; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 3.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 8; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 6; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 3.

Type of pay or allowance: Special dental pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

The unit administrator conducted a premobilization SRP review during 
October 2002 at the unit's home station. However, according to the unit 
administrator, about 30 to 40 soldiers did not attend the SRP session 
because the soldiers would have had to travel from distant locations, 
such as Albuquerque, New Mexico, where they typically attended Army 
Reserve inactive duty training, or for other reasons. Thus, when these 
soldiers arrived at the unit's home station prior to reporting to Fort 
Hood, the unit administrator quickly performed the SRP process for them 
at that time. However, instead of submitting necessary changes to 
soldiers' pay accounts to the Reserve Pay Center, the unit 
administrator waited until the unit arrived at the Fort Hood 
mobilization station to submit them. According to documentation 
obtained from the Reserve Pay Center, some soldiers' documentation was 
not submitted until March 22, 2003, a month after the unit was 
mobilized. As a result, promotion pay increases and other entitlements 
were paid over 2 months late. For 3 soldiers, correct entitlements were 
not received until the soldiers returned from their overseas tour.

Delays in submitting required forms and documentation were the primary 
causes for late pay and entitlements. Also, three soldiers were 
overpaid pay and benefits because their active duty pay was started too 
early. These minor overpayments were collected from the soldiers' pay 
during demobilization out-processing. One soldier received double the 
amount of basic allowance for housing, for an estimated overpayment of 
$6,600. In addition, the process of paying soldiers their family 
separation allowance was not consistently applied for the soldiers of 
the 965thDental Company. For example, a soldier from Gulfport, 
Mississippi, was paid family separation allowance during his commute to 
the mobilization station; however, a soldier from Claremore, Oklahoma, 
was not.

The lack of accountability for deploying soldiers resulted in one unit 
soldier being paid active duty pay even though the soldier never 
mobilized with the unit. This soldier received orders to mobilize with 
the unit, but because the soldier had a disability that prevented his 
serving on active duty, the unit commander excused the soldier from 
mobilization. However, although unit personnel transferred the soldier 
to another unit that was not mobilizing, no one canceled the soldier's 
original mobilization order in the Army Reserve personnel system, or 
notified the Reserve Pay Center to stop the soldier's active duty pay. 
In addition, unit personnel did not notify the Fort Hood mobilization 
station that this soldier had received a mobilization order so the 
mobilization station could confirm that the order had been revoked and 
stop pay for this soldier. Further, the soldier receiving the 
unauthorized pay did not report the overpayments to the unit to which 
he had been transferred. Thus, the soldier received approximately 
$36,000 of active duty pay for which he was not entitled. These 
overpayments continued for more than 12 months and were not identified 
until we discovered them during our visit to the unit in January 2004.

During our visit to the home station, we informed the unit commander 
about the soldier's overpayment and he stated that this soldier should 
not be held responsible for repaying the overpayment because he 
believed the soldier did nothing wrong or illegal. He also stated that 
he did not review the Unit Commander's Pay Management Report because 
the soldiers were able to review their pay online. It is likely that 
the improper payments to this soldier would have been identified if 
either the unit commander or unit administrator had monitored the 
unit's pay reports.[Footnote 26]

Pay Problems While Deployed:

As summarized in table 10, we identified extensive problems associated 
with active duty pays and allowances applicable to the unit's overseas 
deployment to Kuwait. In total, 86 soldiers experienced some type of 
pay problem during the deployed phase, including one soldier who did 
not deploy overseas, but received in-theatre incentives.

Table 10: Deployment Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Hostile fire pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 61; 
Number of soldiers who were underpaid: 9; 
Number of soldiers who were overpaid: 21.

Type of pay or allowance: Hardship duty pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 85; 
Number of soldiers who were overpaid: 85.

Type of pay or allowance: Special dental pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 1.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

During the unit's deployment to Kuwait, soldiers encountered pay 
problems related to hardship duty pay, hostile fire pay, and the combat 
zone tax exclusion, all of which are benefits eligible to soldiers when 
serving in designated hardship duty locations and hostile fire zones. 
All 85 of the soldiers deployed overseas were incorrectly paid for 
either hardship duty pay or hostile fire pay, most of which were 
overpayments.

In total, 85 soldiers did not receive the full amount of their hardship 
duty pay entitlement while deployed to Kuwait. These soldiers were 
underpaid a total of about $8,000. In addition, 76 soldiers continued 
to receive hardship duty pay payments following their return from 
Kuwait. Sixty-six of these soldiers continued receiving the payments 
for 6 or more months following their return home. Overpayments made to 
all 76 soldiers amounted to approximately $46,500. This amount does not 
include the overpayments made to soldiers involving a type of hardship 
duty pay that is no longer paid to soldiers serving in Kuwait.

In addition, we estimated that the combat zone tax exclusion benefit 
was applied to 76 soldiers late or incorrectly. We estimated that 
approximately 75 soldiers received their combat zone tax relief 
benefits 2 to 3 months late, which was after their deployment ended, 
totally $24,000. In addition, one soldier did not receive all of the 
combat zone tax exclusion benefits she was due during her deployment, 
resulting in an estimated $200 underpayment, while 2 other soldiers 
were overpaid for a combined overpayment of about $300.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

Soldiers of the 965th Dental Company returned to Fort Hood in two 
different groups; the first group returned on May 22, 2003, and the 
second group returned on June 10, 2003. As summarized in table 11, 7 of 
93 soldiers had problems associated with properly stopping their active 
duty pays and allowances during their demobilization.

Table 11: Demobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Special dental pay; 
Number of soldiers who were underpaid: 3; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Of the soldiers who experienced pay problems associated with this 
phase, most had underpayments. One of the soldiers we reviewed had his 
active duty pay stopped before his actual demobilization date and 
another soldier's special medical pay was stopped a month early. Each 
soldier was underpaid an estimated $1,200. Another soldier's active 
duty pay continued past his demobilization date for an overpayment of 
approximately $1,400.

In addition, one soldier returned home early from deployment in May 
2003 due to a medical emergency. However, his pay and entitlements were 
not adjusted correctly. As a result, during his convalescence, much of 
which was at his home, the soldier continued to receive hardship duty 
pay, hostile fire pay, the family separation allowance, and the combat 
zone tax exclusion through April 2004 when we brought the overpayments 
to the unit's attention.

[End of section]

Appendix IV: 948th Forward Surgical Team, Southfield, Michigan:

On January 20, 2003, the 948th Medical Detachment Forward Surgical 
(948th Forward Surgical Team) was mobilized to active duty in support 
of Operation Enduring Freedom for a 1-year tour.[Footnote 27] A total 
of 20 soldiers from the 948th Forward Surgical Team, including four 
surgeons, mobilized at its home station in Southfield, Michigan, and 
went through in-processing at the mobilization station at Fort McCoy, 
Wisconsin. On February 28, 2003, the unit deployed to Afghanistan 
through Baghram Air Base, Afghanistan. Most of the 20 soldiers remained 
in Kandahar for about 5 months. While there, the unit provided 
emergency medical attention to wounded soldiers and civilians in and 
around Kandahar and prepared them for evacuation to a combat support 
hospital. Two surgeons from the team returned in June 2003 and a third 
soldier returned in July 2003 as a result of a medical condition and 
was released from active duty on September 27, 2003. Sixteen of the 
remaining 17 soldiers returned to Fort McCoy on August 5, 2003, for 
demobilization and were released from active duty by August 29, 2003. 
The 948th Forward Surgical Team's commander remained in Afghanistan 
until August 8, 2003, when he returned to Fort McCoy for demobilization 
and was released from active duty on September 4, 2003. A time line of 
the unit's movements associated with its mobilization under Operation 
Enduring Freedom is shown in figure 5.

Figure 5: 948th Forward Surgical Team's Mobilization Time Line:

[See PDF for image]

[End of figure]

All 20 soldiers in the 948th Forward Surgical Team experienced one or 
more pay problems associated with their 2003 mobilization to active 
duty. As summarized in table 12, soldiers in the 948th Forward Surgical 
Team experienced pay problems during all phases of their active duty 
mobilization, with the majority of the problems encountered in the last 
two phases. Specifically, we identified pay problems associated with 
(1) basic active duty pay, special medical pays, or allowances for 5 
soldiers during the mobilization phase; (2) basic active duty pay, 
special medical pays, allowances, combat zone tax exclusion, or an in-
theater incentive pay associated with the deployment phase for 20 
soldiers; and (3) basic active duty pay, special medical pays, or 
allowances associated with 18 soldiers' demobilization from active 
duty.

Table 12: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 5 of 20.

Phase: Deployment; 
Number of soldiers with pay problems: 20 of 20.

Phase: Demobilization; 
Number of soldiers with pay problems: 18 of 20.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems in more than one 
phase.

[End of table]

In total, the pay problems we identified resulted in estimated 
overpayments of about $20,700, underpayments of about $2,000, and late 
payments of about $5,600. In addition, we identified about $15,300 and 
about $130 of combat zone tax exclusions that were delayed or not 
refunded, respectively. Available records showed that about $2,300 of 
the $20,700 in identified overpayments were subsequently collected from 
the soldiers.

We were informed of several instances in which the unit's pay problems 
created financial hardships for the unit's soldiers and their families. 
Specifically, several of the unit's soldiers could not pay their bills 
while they were deployed and were forced to borrow money from friends 
and relatives in order to meet their financial obligations.

Mobilization Pay Problems:

As summarized in table 13, we found that five soldiers from the 948th 
Forward Surgical Team experienced underpayments, overpayments, or late 
payments related to their active duty pay and allowances associated 
with their initial mobilization.

Table 13: Mobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Special medical pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 1.

[End of table]

Source: GAO analysis of payroll data.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

Five soldiers experienced a variety of pay problems associated with 
their mobilization to active duty. For example, one physician was 
underpaid the special medical pay he was entitled to receive while on 
active duty. In January 2003, the physician began receiving special 
medical payments at a rate lower than he was entitled to receive. In 
March 2003, DFAS identified and corrected this error by paying the 
physician the correct special medical pay. However, DFAS did not 
retroactively pay the physician the correct medical pay covering the 
first 39 days he was on active duty.

Another soldier experienced a problem related to his basic pay. The 
soldier had previously received a reduction in rank for not completing 
training requirements. On February 12, 2003, the commanding officer 
signed an order revoking the reduction in rank--after the unit was 
mobilized to active duty, but before it was deployed to Afghanistan. 
The Reserve Pay Center received the revocation order on March 7, 2003, 
but did not process this personnel action until April 4, 2003, 
resulting in late payments totaling an estimated $520.

Deployment Pay Problems:

In late February 2003, the 948th Forward Surgical Team left Fort McCoy 
and traveled to Afghanistan. While in Kandahar, the soldiers 
experienced further pay problems related to hardship duty pay, hostile 
fire pay, and to a lesser extent, active duty basic pay, basic 
allowance for housing, family separation allowance, and special medical 
pays. They also experienced problems with respect to their benefits 
associated with the combat zone tax exclusion. Table 14 summarizes the 
pay, allowance, and tax benefit problems that the 948th Forward 
Surgical Team encountered during its deployment.

Table 14: Deployment Pay Problems:

Type of pay, allowance, or tax benefit: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay, allowance, or tax benefit: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay, allowance, or tax benefit: Hostile fire pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 19; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 3.

Type of pay, allowance, or tax benefit: Hardship duty pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 19; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 20.

Type of pay, allowance, or tax benefit: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay, allowance, or tax benefit: Special medical pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

We found that 19 of the 20 soldiers did not receive their initial 
hostile fire pay of $150 for February until an average of 47 days after 
arriving in Afghanistan. We also found that one soldier never received 
her initial hostile fire pay for February and March totaling $300. She 
also never received a retroactive hostile fire payment of $75 for 
February 2003.[Footnote 28]

All 20 soldiers experienced problems with their hardship duty pay. 
Nineteen of the 20 soldiers did not receive their hardship duty pay for 
February 2003 until April 2003. For 13 of the 19 soldiers, their 
February 2003 hardship duty payment was not only late but contained an 
overpayment because the payments covered a period when the soldiers 
were still at Fort McCoy. Additionally, 19 soldiers continued to 
receive hardship duty payments not only after they left the location 
for which they were authorized to receive this pay, but for periods 
ranging from 1 to 5 months following demobilization.

All 20 soldiers waited 67 days before receiving their February combat 
zone tax exclusion benefit payment, which averaged $377. We also found 
that one soldier was not refunded the total amount of taxes withheld 
while in combat zone tax exclusion status.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

Eighteen of 20 soldiers in the 948th Forward Surgical Team experienced 
pay problems associated with their demobilization from active duty. 
Seventeen of the unit's soldiers returned to Fort McCoy in August 2003 
to begin their demobilization process. The other 3 left Afghanistan and 
returned to Fort McCoy in June and July 2003. As summarized in table 
15, soldiers were overpaid their active duty basic pay, certain 
allowances, and special medical pays after their release from active 
duty, while others never received (and were therefore underpaid) all of 
the family separation allowance or special medical pays they were 
entitled to receive.

Table 15: Demobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 12.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 13.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 13.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Special medical pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 3.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

We determined that 16 soldiers received 1 or more days worth of active 
duty basic pay, special medical pays, or allowances after being 
released from active duty. These pay problems occurred because the 
demobilization station was late in entering transactions to stop pays 
and allowances as of the date the soldiers were released from active 
duty.

[End of section]

Appendix V: 443rd Military Police Company, Owings Mills, Maryland:

The 443rd Military Police Company, headquartered in Owings Mills, 
Maryland, has been called to active duty twice since September 11, 
2001. However, only the second mobilization fell within the time period 
of our case study analysis. The first mobilization (October 6, 2001, to 
September 2002) activated 112 soldiers to perform "secure and defend" 
functions at Fort Sam Houston in support of Operation Noble 
Eagle.[Footnote 29] On February 24, 2003, 121 soldiers of the 443rd 
Military Police Company were mobilized with the unit, including 76 who 
had returned from the deployment to Fort Sam Houston 5 months prior to 
this mobilization and 25 soldiers who were cross-leveled in from other 
units. These cross-leveled soldiers included 12 soldiers from Puerto 
Rico, 7 soldiers from Pennsylvania, 3 soldiers from Maryland, and 1 
soldier each from New Jersey, Virginia, and West Virginia.

In support of Operation Enduring Freedom, soldiers from the 443rd 
Military Police Company reported to the home station in Owings Mills 
for a SRP designed to help prepare them for mobilization. They later 
reported to Fort Lee, Virginia on February 27, 2003, for additional 
mobilization and in-processing procedures. After approximately 2.5 
months at Fort Lee, 112 soldiers arrived in Iraq on May 15. Of the 9 
remaining soldiers, 1 soldier arrived in Iraq earlier, on May 14, 1 
soldier arrived on September 16, and 7 were on medical hold at Fort Lee 
for the entire mobilization. While in-theater, the 443rd Military 
Police Company operated a prison, Camp Cropper, located near the 
Baghdad airport. On December 6, 2003, 112 of the 114 soldiers who 
deployed to Iraq left the Middle East and returned to Fort Lee. One of 
the 2 other soldiers left early--on August 17--and the other left 
later--on December 14. The soldiers of the 443rd Military Police 
Company began demobilizing and returning to their civilian jobs on 
December 15. By January 15, 2004, all but 6 of the 121 soldiers had 
demobilized; the 6 soldiers remained on active duty to receive medical 
treatment at Fort Lee. A time line of actions associated with the 
unit's active duty mobilization is shown in figure 6.

Figure 6: 443rd Military Police Company's Mobilization Time Line:

[See PDF for image]

[End of figure]

As summarized in table 16, soldiers experienced a range of pay problems 
at every stage of the 443rd Military Police Company's tour of active 
duty. Overall, 119 of 121 soldiers who mobilized experienced some type 
of pay problem associated with their activation to, during, or 
deactivation from federal service in support of Operation Enduring 
Freedom. Specifically, we found that (1) 70 soldiers experienced 
underpayments, overpayments, or late payments during their initial 
mobilization; (2) 114 soldiers experienced underpayments, 
overpayments, or late payments during their tour of active duty at Camp 
Cropper, Iraq; and (3) 17 soldiers experienced underpayments, 
overpayments, or late payments during their demobilization.

Table 16: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 70 of 121.

Phase: Deployment; 
Number of soldiers with pay problems: 114 of 121.

Phase: Demobilization; 
Number of soldiers with pay problems: 17 of 121.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems in more than one 
phase.

[End of table]

The dollar amounts associated with overpayments, underpayments, and 
late payments we identified were approximately $25,000, $15,000 and 
$20,000, respectively. In addition, soldiers received late payment of 
their combat zone tax exclusion benefit totaling about $33,000. Of the 
overpayments we identified, about $4,000 were subsequently collected 
from the unit's soldiers.

Mobilization Pay Problems:

As summarized in table 17, we found that 67 soldiers from the 443rd 
Military Police Company experienced overpayments, underpayments, or 
late payments related to basic pay and the associated entitlements when 
called to active duty.

Table 17: Mobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 2.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 20; 
Number of soldiers who were underpaid: 10; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Cost of living allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 24; 
Number of soldiers who were underpaid: 4; 
Number of soldiers who were overpaid: 32.

Type of pay or allowance: Overseas housing allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Before arriving at the mobilization station, the 99th Regional 
Readiness Command performed a SRP for the 443rd Military Police Company 
at their home station. This review was designed to prepare soldiers for 
mobilization by confirming that their financial documents and personnel 
paperwork were in order, as well as verifying that the soldiers were 
medically fit to mobilize. The finance portion of the SRP consisted of 
a briefing that covered the different entitlements soldiers could 
expect to receive and a review of how to read the soldiers' Master 
Military Pay Accounts. Soldiers who found errors in their individual 
accounts were supposed to notify the Regional Readiness Command's 
finance personnel at the SRP, who would then process the corrections 
upon returning to their headquarters and send the necessary 
documentation to Fort McCoy's Reserve Pay Center.

Upon reporting to Fort Lee, the 443rd Military Police Company's active 
Army mobilization station, the unit underwent a second SRP, as required 
by Army regulations. However, despite going through two SRPs, the 
soldiers still experienced various pay problems related to their 
mobilization.

For example, not all of the eligible soldiers in the 443rd Military 
Police Company received the proper amount of family separation 
allowance. Many of the unit's soldiers began receiving family 
separation allowance earlier than they should have, resulting in small 
overpayments that totaled approximately $550 for the unit. In addition, 
15 soldiers received late family separation allowance payments during 
mobilization.

In addition, the soldiers of the 443rd Military Police Company also had 
difficulties in starting their basic allowance for housing entitlements 
and active duty basic pay. Ten soldiers experienced overpayments and 6 
soldiers experienced underpayments of their basic allowance for 
housing.

The 12 soldiers cross-leveled into the 443rd Military Police Company 
from Puerto Rico were not entitled to the basic allowance for housing 
type I during their mobilization because they were classified as 
overseas soldiers. Instead, these soldiers received basic allowance for 
housing type II, a cost of living allowance and an overseas housing 
allowance. One soldier received an overpayment of the cost of living 
allowance and 2 soldiers received underpayments of their overseas 
housing allowance entitlements, all of which occurred because these 
payments were based on incorrect rates.

Four members of the unit experienced problems starting their active 
duty basic pay. Two soldiers received a delay in their promotions, 
resulting in nearly $500 in late payments. The two other soldiers had 
received demotions that were not promptly entered into DJMS-RC. The 
first soldier's demotion had been effective at the start of the 
mobilization, but the soldier continued to receive payments at the 
incorrect, higher rate until July 2003. The resulting overpayments of 
active duty basic pay, totaling over $2,500, were not identified by the 
Reserve Pay Center until we raised questions about them.

The second soldier, however, incurred almost $6,400 in collections when 
his demotion was processed 16 months after it became effective, and 
despite the fact that his higher rank was restored shortly thereafter. 
His demotion occurred because he had been unable to attend training to 
maintain his rank before being mobilized for Operation Noble Eagle in 
October 2001. During this mobilization, in February 2002, Army 
personnel at the 99th Regional Readiness Command generated a grade 
reduction order, but the transaction was not entered into DJMS-RC until 
June 2003, 4 months after the soldier's mobilization for Operation 
Enduring Freedom and after his deployment to Iraq. Although his 
previous grade was restored in July 2003, the restoration was not 
retroactive, so the soldier still had to pay back almost $6,400.

One problem that occurred during the mobilization process did not have 
an immediate effect on the soldiers of the 443rd Military Police 
Company, but rather later, during their deployment. In October 2003, 20 
soldiers had their basic allowance for housing switched from the 
regular entitlement to the partial basic allowance for housing. In 
addition, another 16 soldiers had their family separation allowance 
entitlements stopped. These changes occurred because during the SRP 
process in February, finance personnel failed to extend the dates of 
eligibility for the basic allowance for housing and the family 
separation allowance to reflect the end date of the current 
mobilization. Pay records showed that these 36 soldiers were entitled 
to receive one of these entitlements through October 2003, exactly 2 
years after the date of the first mobilization. While the soldiers were 
paid for active duty beyond the October end date of eligibility in the 
system, the allowances were automatically turned off by the system. 
Most of these problems were caught shortly after occurring and were 
corrected by the end of the following month, resulting in about $5,750 
of late payments. However, 4 soldiers failed to have their entitlements 
turned back on, resulting in total underpayments of $3,500.

Soldiers of the 443rd Military Police Company complained that finance 
personnel at Fort Lee in March refused to help them and told soldiers 
that they needed to contact their unit administrator to fix their 
problems. The unit administrator, who did not mobilize with the unit, 
voluntarily went to Fort Lee to help ensure that all of the Company's 
soldiers' pay issues were addressed. However, finance personnel at Fort 
Lee asked him to leave after he attempted to help resolve some of his 
unit's pay problems. Despite spending over 2 months at Fort Lee, many 
of the pay problems that began during mobilization were not corrected 
by the time the soldiers deployed to Iraq. In fact, 52 of the 121 
soldiers left the mobilization station with unresolved pay-related 
problems.

Pay Problems While Deployed:

As summarized in table 18, we identified a number of pay problems 
associated with active duty pays and allowances during the 443rd 
Military Police Company's deployment while on active duty.

Table 18: Deployment Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 6; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 5; 
Number of soldiers who were underpaid: 4; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Hardship duty pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 107; 
Number of soldiers who were underpaid: 112; 
Number of soldiers who were overpaid: 5.

Type of pay or allowance: Hostile fire pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 2.

Type of pay or allowance: Overseas housing allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Cost of living allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

While deployed in Iraq, all of the soldiers experienced problems 
related to the location-based payments--specifically, problems with 
hardship duty pay, hostile fire pay, and the combat zone tax exclusion. 
All of the 114 soldiers deployed to Iraq with the 443rd Military Police 
Company experienced some sort of overpayment, underpayment, or late 
payment of at least one of these three entitlements.

Soldiers in the 443rd Military Police Company were entitled to $100 per 
month for hardship duty pay for serving in Iraq. However, officials at 
the Army area servicing finance office paid the first partial month's 
hardship duty pay more than 2 months after it was due to 107 of the 114 
soldiers deployed to Iraq. Of the remaining 7 soldiers, 4 received 
hardship duty pay on time and 3 never received the first partial 
month's hardship duty pay during our audit period. Additionally, none 
of the 113 soldiers remaining in Iraq during December 2003 received any 
hardship duty pay payments for the partial month they spent in-theater. 
Soldiers in the unit also experienced assorted individual problems 
relating to the payment of the hardship duty pay entitlement. For 
example, 1 soldier who remained on medical hold at Fort Lee received 
hardship duty pay payments, totaling over $350, despite never 
deploying. Two soldiers each received two hardship duty pay payments in 
a given month, resulting in over $150 in overpayments. Finally, one 
soldier continued to receive over $300 in hardship duty pay payments 
after leaving Iraq in August 2003.

Of the 113 soldiers entitled to hostile fire pay during the deployment, 
3 experienced some sort of problem with this pay. Two soldiers received 
overpayments of hostile fire pay, including 1 soldier who continued to 
receive hostile fire pay after he left the in-theater location and 
another soldier who erroneously received $300 in hostile fire pay 
instead of the correct $225 amount for 1 month. This second soldier 
also received part of his May 2003 hostile fire pay 75 days after it 
was due. Finally, 1 other soldier experienced a $450 underpayment of 
hostile fire pay because he stopped receiving the entitlement before 
leaving Iraq.

Of the 114 soldiers deployed to Iraq, 112 received their first month's 
combat zone tax exclusion more than 30 days after they were entitled to 
it. This resulted in late payments totaling over $33,000, more than the 
late payments from all other sources combined. Additionally, 3 soldiers 
experienced overpayments and underpayments related to the combat zone 
tax exclusion. One of these soldiers erroneously received over $250 as 
a combat zone tax exclusion repayment related to a bonus payment that 
was taxable. Another soldier did not receive his combat zone tax 
exclusion repayment for the last 2 months of his mobilization, creating 
an overwithholding of over $400.

We were unable to determine the extent to which one additional soldier 
in the unit experienced problems with his combat zone tax exclusion, 
hardship duty pay, and hostile fire pay during the mobilization. His DD 
Form 214, Certificate of Release and Discharge from Active Duty, stated 
that the soldier served with his unit in theater from May 15, 2003, to 
December 6, 2003. However, the soldier did not receive any of these 
location-based entitlements during his tour of duty. Pay personnel at 
Fort McCoy stated that his records indicate he was on convalescent 
leave (leave for soldiers returning to duty after illness or injury) 
from May 21 to July 16, and therefore may not have been entitled to 
these allowances. Pay personnel at Fort McCoy were continuing to 
research this case and could not tell us anything further. Without 
additional information, we could not determine whether this soldier was 
paid correctly.

In addition, during this phase, some of the soldiers of the 443rd 
Military Police Company also experienced various individual problems 
with active duty basic pay, the basic allowance for housing, and the 
overseas housing allowance. Because of delays in promotions, six 
soldiers experienced late payments of active duty basic pay and four of 
these soldiers also experienced late payments of basic allowance for 
housing. Other problems included one soldier who received overpayments 
of the basic allowance for housing throughout the mobilization, 
totaling over $850, because her spouse was a service member who 
periodically went on and off duty. Two other soldiers had their 
overseas housing allowance paid inconsistently and at varying rates, 
creating net overpayments for both soldiers.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

The soldiers of the 443rd Military Police Company began to demobilize 
in December 2003. As summarized in table 19, some soldiers continued to 
experience pay problems throughout their demobilization and even after 
release from active duty. These problems consisted primarily of 
differences between the last dates for which soldiers were paid and the 
dates of release from active duty as recorded on the DD Form 214, 
Certificate of Release or Discharge from Active Duty.

Table 19: Demobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 5.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 3; 
Number of soldiers who were overpaid: 6.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 4.

Type of pay or allowance: Hardship duty; pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0 ; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Type of pay or allowance: Overseas housing allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 7; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Of the 115 soldiers who demobilized by the end of our audit period, 
including 2 who had been on medical hold, 6 soldiers were paid beyond 
their date of demobilization and 2 soldiers had their pay stopped 
shortly before demobilizing. The 6 soldiers paid beyond their date of 
demobilization were overpaid for an average of 19 days and nearly 
$2,500 each. This includes 1 soldier who was overpaid for at least 68 
days and $10,500. This soldier, who demobilized in February 2004, 
stated that he contacted his demobilization station, home unit, and the 
pay section of the Regional Readiness Command by early April, but 
nevertheless continued to be paid through April 2004. The 2 soldiers 
whose pays were stopped before demobilizing were underpaid a total of 
almost $400.

In addition to the problems associated with the date of release from 
active duty, several soldiers experienced other problems related to 
their demobilization. For example, the demobilization station processed 
"hardship duty pay for certain places" for 1 soldier from May 2003 to 
December 2003. This type of hardship duty pay has not been authorized 
for newly deployed soldiers since December 2001 and the soldier had 
received his correct "hardship duty pay for designated areas" while he 
was deployed in Iraq. This erroneous transaction during the soldier's 
out-processing created an overpayment of approximately $150 that went 
undetected. Additionally, 7 of the 12 soldiers cross-leveled into the 
443rd Military Police Company from Puerto Rico experienced late 
payments of their last month's overseas housing allowance entitlement, 
totaling almost $1,500.

[End of section]

Appendix VI: FORSCOM Support Unit, Finksburg, Maryland:

A major in the Army's Individual Ready Reserve,[Footnote 30] who lives 
in Maryland, volunteered for active duty. He received orders mobilizing 
him to active duty on March 6, 2003, in support of Operation Iraqi 
Freedom. The major was activated as a separate one-person unit. Because 
he was mobilized from an inactive status, he did not have a home unit. 
He reported to Fort McPherson, Georgia, on March 6, 2003, where he 
participated in an Army SRP. On March 9, 2003, he reported to Nellis 
Air Force Base in Nevada for training. Because he was to serve as an 
Army liaison to the Air Force while deployed, on March 17, 2003, he 
reported to Seymour Johnson Air Force base in North Carolina, where he 
underwent an Air Force mobilization in-processing review with the Air 
Force's 4th Fighter Wing. He arrived in Qatar on March 25, 2003. He was 
assigned to serve as an Army Forces Command (FORSCOM) Ground Liaison 
Officer attached to the Air Force's 379th Expeditionary Force at the 
Air Force base at Doha, Qatar. As a Ground Liaison Officer, he was 
responsible for a team of Army officers that briefed Air Force pilots 
before every mission during the Iraqi offensive on the latest 
information concerning the location of Army troops and enemy forces. He 
was also responsible for providing briefings to the Air Force general 
in charge of flight operations at Doha on the status and positions of 
coalition ground forces. He served in this capacity until May 1, 2003, 
when he left Qatar. On May 2, 2003, he underwent Air Force active duty 
outprocessing with the Air Force's 4th Fighter Wing at Seymour Johnson 
Air Force Base. He arrived at Fort McPherson on May 4, 2003, for 
demobilization processing. He was demobilized from active duty on May 
15, 2003, and returned to his home in an inactive status as a member of 
the Army's Individual Ready Reserve. In August 2003, the major resigned 
his commission and received an honorable discharge from the Army 
Reserve. Key events associated with the major's active duty pays and 
allowances for his 2003 mobilization are summarized in figure 7.

Figure 7: FORSCOM Support Unit Soldier Time Line:

[See PDF for image]

[End of figure]

As summarized in table 20, this one-soldier unit experienced various 
pay problems associated with his location-based active duty pays and 
allowances that continued until well after his demobilization to 
Individual Ready Reserve status. Specifically, we found that this 
single-soldier unit (1) did not have any underpayments, overpayments, 
or late payments during initial mobilization; (2) experienced 
overpayments and late payments associated with deployment location-
based pays, allowances, and related tax benefits; and (3) continued to 
experience problems with active duty pays, allowances, and related tax 
benefits for months after his demobilization.

Table 20: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 0 of 1.

Phase: Deployment; 
Number of soldiers with pay problems: 1 of 1.

Phase: Demobilization; 
Number of soldiers with pay problems: 1 of 1.

Source: GAO analysis.

Note: Pay problems associated with deployment continued through 
demobilization.

[End of table]

The dollar amounts associated with overpayments and late payments we 
identified were about $8,000 and $300, respectively. Of the 
overpayments we identified, all were subsequently collected from the 
soldier by May 31, 2004.

Mobilization Pay Problems:

Finance personnel at the soldier's mobilization station at Fort 
McPherson, Georgia, started his active duty pay entitlements associated 
with his initial mobilization. We did not identify any pay problems 
associated with the soldier's initial mobilization to active duty.

Pay Problems While Deployed:

As summarized in table 21, we identified active duty pay and combat 
zone tax benefit problems associated with the soldier's assigned 
deployment location while on active duty. When the soldier arrived at 
his assigned active duty deployment location in Qatar on March 25, 
2003, he was entitled to receive hardship duty pay and was entitled to 
exempt his pay from federal taxes while assigned to that location. 
However, while the soldier went through an Air Force in-processing 
procedure when he arrived in Qatar, there were no procedures in place 
to provide flight manifest documentation to an Army area servicing 
finance office notifying it of his arrival. Such documentation is 
necessary to start the soldier's hostile fire pay and related combat 
zone tax exclusion benefits. Because he was assigned to support an Air 
Force operation, he did not process through, or have any access to, an 
Army area servicing finance office to start his location-based pays and 
related tax benefits. It was not until he left Qatar and arrived at his 
demobilization station at Fort McPherson that finance personnel at that 
location received supporting documentation from the soldier and took 
the actions necessary to process transactions for him to receive his 
pay and tax benefit entitlements. Consequently, he did not receive any 
of his hostile fire pay until May 21, 2003, or his related combat zone 
tax exclusion benefits until June 4, 2003--after he returned from his 
overseas deployment.

Table 21: Deployment Pay Problem:

Type of pay or allowance: Hostile fire pay; 
Type of problem: Late payment.

Source: GAO analysis.

[End of table]

Army finance officials did not initiate the soldier's hostile fire pay 
and combat zone tax exclusion benefit, which he was entitled to receive 
beginning in March 2003, until officials at his demobilization station 
took action to start this pay and tax benefit. The soldier was deployed 
to serve as an Army liaison to an Air Force unit with an Air Force 
finance office; he was unable to find anyone at or near his deployed 
location who could help him get his entitled location-based pay and 
related tax benefits started. Air Force finance personnel told the 
soldier to contact finance personnel back in the United States at Fort 
McPherson to address his pay problems. The soldier told us that while 
he was in Qatar he was able to contact DFAS by e-mail, but officials 
there told him there was little they could do to help him get his 
location-based pays and tax benefits started. He said that telephone 
calls to the United States were difficult because of time differences 
and his limited access to phones to make an overseas call.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

The soldier left Qatar on May 1, 2003, to return to his demobilization 
station at Fort McPherson. Fort McPherson issued orders to demobilize 
him from active duty to the Army's Individual Ready Reserve as of May 
15, 2003. As summarized in table 22, during his demobilization and 
after his release from active duty, the soldier continued to experience 
pay problems. These problems were overpayments associated with the 
soldier receiving active duty pay after the date of his demobilization 
from active duty.

Table 22: Demobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Type of problem: Overpayment.

Type of pay or allowance: Basic allowance for subsistence; 
Type of problem: Overpayment.

Type of pay or allowance: Basic allowance for housing; 
Type of problem: Overpayment.

Type of pay or allowance: Family separation allowance; 
Type of problem: Overpayment.

Type of pay or allowance: Aviation career incentive pay; 
Type of problem: Overpayment.

Source: GAO analysis.

Note: Soldier may have experienced problems with more than one type of 
pay or allowance.

[End of table]

The soldier out-processed through Fort McPherson and received his DD 
Form 214, Certificate of Release or Discharge from Active Duty, with a 
release from active duty date of May 15, 2003. However, finance 
personnel at the Fort McPherson demobilization station did not take 
action to stop his active duty pays and allowances as of that date. As 
a result, he continued to receive active duty pays and allowances that 
he was not entitled to receive for a month after his demobilization--
from May 16 through June 13, 2003. In addition, he continued to receive 
his combat zone tax exclusion benefits for the same period, May 16 
through June 13, even though he had not only left the combat zone, but 
had already demobilized from active duty and returned home. The income 
tax withholdings for this period were refunded directly to the soldier. 
His pay was not stopped at the end of his active duty tour initially 
because finance personnel at Fort McPherson were waiting for his 
hardship duty pays to "clear," but they then forgot to stop all pays 
related to active duty.

This failure to stop the soldier's active duty pays and allowances on 
time resulted in the soldier writing a $6,150.75 check to DFAS in an 
attempt to resolve all overpayment issues associated with his 
mobilization. As summarized in table 23, the soldier undertook a series 
of time-consuming phone calls and faxes to Fort McPherson, DFAS-
Indianapolis, DFAS-Denver, and DFAS-Cleveland over a 13-month period to 
finally get his pay issues resolved. Ultimately, the soldier's pay 
issues related to his March and April 2003 active duty deployment were 
only identified and resolved through the relentless efforts of the 
soldier and our inquiries into the matter. With the soldier's recent 
$1,140.54 check to DFAS, his pay issues with his March and April 2003 
mobilization were resolved--over a year after his deployment ended.

Table 23: Timetable of Soldier's Attempts to Correct Problems Related 
to Active Duty Entitlements:

Date: June 6, 2003; 
Action: Based on a Leave and Earnings Statement indicating he was 
continuing to receive active duty pays and allowances after he was 
demobilized, the soldier sent an e-mail through his myPay online 
account asking how to get these erroneous active duty payments stopped. 
About 2 weeks later, the soldier was told he needed to contact the pay 
office at his demobilization location (Fort McPherson) to get his 
active duty payments stopped.

Date: June 30, 2003; 
Action: The soldier spoke with a Fort McPherson official who stopped 
his active duty payments and faxed him documentation showing he owed 
$6,150.75 as a result of his active duty overpayments.

Date: July 25, 2003; 
Action: The soldier mailed a check for $6,150.75 to the DFAS-
Indianapolis address he was provided.

Date: August 15, 2003; 
Action: The soldier called Fort McPherson officials to inquire why his 
Leave and Earnings Statement continued to show a debt that he'd already 
repaid.

Date: September 4, 2003; 
Action: After three more phone calls to officials at Fort McPherson, on 
September 4, 2003, the soldier was told that DFAS had received his 
check and would adjust his account to remove the erroneous debt.

Date: November 3, 2003; 
Action: Two months later, on November 3, 2003, after again receiving a 
Leave and Earnings Statement showing an erroneous debt balance, the 
soldier again called Fort McPherson. He was told, "there is nothing 
more I can do for you" and advised to call 1-888-PAY-ARMY for service.

Date: November 3, 2003; 
Action: When he called 888-PAY-ARMY, the soldier was referred to debt 
collections (at 800-962-0648).

Date: November 3, 2003; 
Action: The soldier called 800-962-0648 and was assured that "he did 
not need to worry, because he did not appear in their debt system.".

Date: December 23, 2003; 
Action: After receiving another Leave and Earnings Statement showing an 
erroneous debt balance, the soldier called 888-PAY-ARMY. He was told 
that only DFAS-Indianapolis could help him resolve his problem, but the 
service representative would not give him a phone number to call at 
that location. Instead, he was told to call Fort McPherson. The soldier 
protested that an official at Fort McPherson told him that they could 
not help him and that he would have to contact the number he was now 
calling. Nonetheless, he was told he had to call Fort McPherson.

Date: December 23, 2003; 
Action: The soldier called Fort McPherson. He was told to fax a copy of 
his canceled check showing that he repaid his active duty overpayment 
and they would again try to rectify this erroneous debt.

Date: January 5, 2004; 
Action: After receiving a copy of his canceled check sent to DFAS in 
July 2003, the soldier faxed a copy to Fort McPherson.

Date: January 8, 2004; 
Action: The soldier e-mailed us to ask for our assistance in resolving 
this erroneous debt.

Date: April 20, 2004; 
Action: After the soldier informed Fort McPherson officials that he 
contacted us about this matter, he was informed that a complete review 
of his pay records and a recalculation of the payments he received 
showed he owed an additional $1,140.54 associated with an erroneous 
combat zone tax exclusion benefit.

Date: May 3, 2004; 
Action: The soldier wrote a check for $1,140.54 and sent it to DFAS.

Source: GAO analysis.

[End of table]

[End of section]

Appendix VII: 629th Transportation Detachment, Fort Eustis, Virginia:

The 629th Transportation Detachment was called to active duty in 
support of Operation Enduring Freedom on March 15, 2003, for a period 
not to exceed 365 days. Twenty-seven soldiers with the 629th 
Transportation Detachment received orders to mobilize; but only 24 
soldiers actually deployed with the unit.[Footnote 31] The unit arrived 
at its home station, Fort Eustis, Virginia, on March 15, 2003, where it 
began the SRP in-processing. On March 18, 2003, the soldiers continued 
their mobilization processing at Fort Eustis, Virginia, which was also 
their designated mobilization station. The unit remained at Fort Eustis 
for approximately 2 months undergoing additional in-processing and 
training. On May 22, 2003, the 629th Transportation Detachment was 
deployed to Kuwait and was assigned responsibility for tracking 
supplies in and out of Army field locations in and around Kuwait. After 
completing its assigned mission, the unit left Kuwait on December 5, 
2003, to return to its demobilization station. By the end of January 
2004, all of the soldiers were released from active duty with the 
exception of 1 soldier who was placed on medical hold. A time line of 
key actions associated with the unit's mobilization under Operation 
Enduring Freedom is shown in figure 8.

Figure 8: 629th Transportation Company's Time Line:

[See PDF for image]

[End of figure]

As summarized in table 24, all 24 of the deployed soldiers experienced 
at least one pay problem associated with their activation to, during, 
and deactivation from, active duty service in support of Operation 
Enduring Freedom. Specifically, we found that (1) 5 soldiers 
experienced underpayments or late payments during their initial 
mobilization; (2) 24 soldiers experienced underpayments, overpayments, 
or late payments during their tour of active duty in and around Kuwait, 
including in-theater incentives such as hostile fire pay and hardship 
duty pay; and (3) 1 soldier was underpaid entitled pays and allowances 
associated with his demobilization.

Table 24: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 5 of 24.

Phase: Deployment; 
Number of soldiers with pay problems: 24 of 24.

Phase: Demobilization; 
Number of soldiers with pay problems: 1 of 24.

Source: GAO analysis.

Note: Soldier may have experienced pay problems in more than one phase.

[End of table]

In total, we identified estimated overpayments of about $3,000, 
underpayments of about $2,000, and late payments of about $14,000, 
associated with the pay problems we identified. Specifically, we 
determined the following:

* More than half of the $3,000 in overpayments we identified was 
associated with the majority of the unit's soldiers receiving an extra 
$75 payment of hostile fire pay during their tour of active duty in 
Kuwait.

* More than 70 percent of the soldiers deployed to Kuwait did not 
receive hardship duty pay in the months of May and December 2003, 
contributing to the underpayments of $2,000.

* An estimated $8,000 of the $14,000 in late payments we identified 
were associated with two soldiers. Available pay records for one 
soldier show he did not receive the correct amount of basic allowance 
for housing during his active duty tour until 9 months after his 
mobilization date. Another soldier did not receive the correct amount 
of basic pay and basic allowance for housing until approximately 3 
months after his promotion had become effective.

Mobilization Pay Problems:

As summarized in table 25, we identified several soldiers who 
experienced underpayments or late payments related to basic pay and 
associated entitlements associated with the mobilization phase. Most, 
if not all, of these cases were likely the result of proper 
documentation not being submitted promptly, resulting in some soldiers 
receiving delayed housing allowances and promotions. For example, one 
soldier did not receive the correct amount of basic pay and basic 
allowance for housing based on a promotion that should have been 
effective in January 2003 but did not get processed until 3 months 
later in mid-April. We found the personnel action form was not signed 
until April 2003.

Table 25: Mobilization Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 2; 
Number of soldiers who were underpaid: 2; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldier may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Upon receipt of individual mobilization orders, the unit's soldiers 
reported to their unit's home station in Fort Eustis, Virginia, where 
they attended a SRP. The purpose of this SRP was to ensure that all 
soldiers had all required administrative paperwork, financial 
documents, and were physically fit for the ensuing mobilization. 
Personnel from the 99th Regional Readiness Command sent a team who 
conducted the finance portion of the SRP to verify the soldiers' 
supporting financial documentation. If necessary, the 99th Regional 
Readiness Command team submitted transactions with the necessary 
supporting documentation to the Reserve Pay Center at Fort McCoy to 
update the soldiers' Master Military Pay Accounts to correctly reflect 
their mobilized pay status. However, we identified several soldiers who 
did not have appropriate supporting documentation maintained in their 
files to justify basic allowance for housing payments. For example, we 
identified 12 soldiers who received basic allowance for housing 
payments for which we were unable to obtain supporting documentation 
(i.e., DA Form 5960). Total basic allowance for housing payments for 
those 12 soldiers amounted to over $110,000.

Additionally, we identified inconsistencies with the determinations of 
soldiers' entitlements to the family separation allowance made at the 
mobilization station. According to the DOD FMR Volume 7A, soldiers 
should be separated from their families by more than 50 miles in order 
to receive the family separation allowance. We found 10 soldiers from 
the 629th Transportation Detachment, including the soldier who was 
placed on medical hold, who received the family separation allowance 
while at their home station and mobilization station even though that 
location was less than 50 miles from their home. The soldiers were 
never informed by pay technicians at the unit or at their mobilization 
station that they were not entitled to the family separation allowance 
if they were staying at Fort Eustis but their home of record was within 
50 miles, and we did not see any documentation showing that the unit 
commander had approved an exception to the mileage restriction on 
family separation allowance eligibility.

Pay Problems While Deployed:

As summarized in table 26, we identified a number of pay problems with 
five different types of active duty pays and allowances associated with 
the unit's deployment while on active duty.

Table 26: Deployed Pay Problems:

Type of pay or allowance: Basic pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 8; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 3; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Hostile fire pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 22; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 23.

Type of pay or allowance: Hardship duty pay; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 24; 
Number of soldiers who were overpaid: 2.

Source: GAO analysis.

Note: Soldiers may have experienced more than one type of problem with 
more than one type of pay or allowance.

[End of table]

During the soldiers' deployment to Kuwait, all 24 of the 629th 
Transportation Detachment's soldiers encountered pay problems related 
to hardship duty pay and hostile fire pay. Most soldiers did not 
receive any hardship duty pay during the month they arrived in-theater 
and the month that they left the theater. In addition, all of the 
soldiers received their combat zone tax exclusion benefit at least one 
month late.

Per DOD FMR Volume 7A, soldiers who perform duties in designated areas 
for over 30 days are entitled to the hardship duty pay incentive. The 
regulation specified the general area of Kuwait as a designated area 
and provided $100 a month to all soldiers serving there. Per the same 
regulation, soldiers serving in Kuwait are also entitled to hostile 
fire pay of $225 per month. Both hardship duty pay and hostile fire pay 
should start at the same time upon the soldier's arrival in Kuwait. In 
the case of the 629th Transportation Detachment, the soldiers had their 
military identification cards swiped into the Tactical Personnel System 
upon landing in Kuwait to document their date of arrival. However, most 
of the soldiers never received any payment for hardship duty pay in the 
month that they arrived in Kuwait, nor did most receive any hardship 
duty pay payment in the month that they left Kuwait. Officials at the 
local Army area servicing finance office did not initiate the unit's 
hostile fire pay incentive until 1 month after the soldiers arrived in 
theater. Furthermore, the soldiers incorrectly received a hostile fire 
pay payment of $300 during the month of June (an overpayment of $75). 
One of the unit's soldiers left Kuwait earlier than the rest of the 
unit, but the soldier's hardship duty pay continued for another 6 
months and his hostile fire pay continued for 1 extra month before it 
was stopped.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

Soldiers of the 629th Transportation Detachment returned to their 
demobilization station at Fort Eustis, Virginia, around December 5, 
2003, and began the SRP out-processing. As summarized in table 27, we 
identified one soldier who experienced pay problems associated with the 
demobilization phase of his active duty tour.

Table 27: Demobilization Pay Problems:

Type of pay or allowance: Family separation allowance; 
Number of soldiers who did not receive pay or allowance within 30 days 
of entitlement: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

[End of table]

We identified one soldier who did not receive any family separation 
allowance payments during the last 3 months of active duty. This 
soldier's home of record was more than 50 miles from the demobilization 
station in Fort Eustis, Virginia, and he was not commuting daily. 
Consequently, he should have received family separation allowance for 
these 3 months. Ten other soldiers in the unit who returned to Fort 
Eustis and lived within the 50-mile range of the demobilization station 
and did not have a commander's exception on file received $250 per 
month in family separation allowance payments until their release from 
active duty. By January 2004, all mobilized soldiers, with the 
exception of the soldier who was on medical hold, were released from 
active duty.

[End of section]

Appendix VIII: 3423rd Military Intelligence Detachment New Haven, 
Connecticut:

The 3423rd Military Intelligence Detachment was called to active duty 
in support of Operation Noble Eagle on December 3, 2002. A total of 11 
soldiers from the unit were mobilized to support operations at the 
Intelligence and Security Command at Fort Belvoir, Virginia.[Footnote 
32] The 3423rd Military Intelligence Detachment does not have a unit 
administrator during peacetime and had no dedicated unit administrator 
during the mobilization. The unit was called to active duty and 
reported to its mobilization station, Fort Lee, Virginia, where the 
soldiers went through in-processing during December 2002. After this 
processing, the unit went to the Army's National Ground Intelligence 
Center in Charlottesville, Virginia, for 1 week of additional in-
processing and was then transferred to Fort Belvoir. For the next 11 
months, the unit carried out its mission to gather and analyze 
intelligence information in support of U.S. Army Intelligence and 
Security Command operations at Fort Belvoir. In November 2003, the 
3423rd Military Intelligence Detachment began to demobilize at Fort Lee 
and by December 2, 2003, all but 1 soldier had been released from 
active duty. The unit reported that the remaining soldier stayed on 
active duty at Fort Belvoir for an additional year. A time line of key 
actions associated with the unit's mobilization to active duty is shown 
in figure 9.

Figure 9: 3423rd Military Intelligence Company's Mobilization Time 
Line:

[See PDF for image]

[End of figure]

As summarized in table 28, soldiers experienced a range of pay problems 
at every stage of the 3423rd Military Intelligence Detachment's tour of 
active duty. The unit did not have a dedicated unit administrator to 
carry out pay support responsibilities during its active duty 
mobilization. Overall, all 11 soldiers in the unit experienced some 
type of pay problem associated with their activation to, during, or 
deactivation from active duty in support of Operation Noble Eagle. 
Specifically, we found that (1) 10 soldiers experienced underpayments, 
overpayments or late payments during their initial mobilization; (2) 9 
soldiers experienced underpayments, overpayments, or late payments 
during their tour of active duty at Fort Belvoir; and (3) 9 soldiers 
experienced underpayments, overpayments, or late payments during their 
demobilization.

Table 28: Pay Problems by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 10 of 11.

Phase: Deployment; 
Number of soldiers with pay problems: 9 of 11.

Phase: Demobilization; 
Number of soldiers with pay problems: 9 of 11.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems in more than one 
phase.

[End of table]

The dollar amounts associated with the overpayments, underpayments, and 
late payments we identified were about $18,500, $4,000, and $5,000, 
respectively. Of the overpayments we identified, about $2,000 were 
subsequently collected from the unit's soldiers as of January 31, 2004.

Mobilization Pay Problems:

As summarized in table 29, we found that 10 of the 11 soldiers from the 
3423rd Military Intelligence Detachment experienced pay problems 
related to basic pay and the associated entitlements when called to 
active duty.

Table 29: Mobilization Pay Problems:

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who received late payments: 1; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Cost of living allowance; 
Number of soldiers who received late payments: 8; 
Number of soldiers who were underpaid: 5; 
Number of soldiers who were overpaid: 4.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 9.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems with more than one 
type of pay or allowance or more than one type of problem per pay or 
allowance.

[End of table]

Before mobilization, the unit attended several SRPs put on by the 94th 
Regional Readiness Command. Specifically, after September 11, 2001, the 
unit received warnings that it might be called up and therefore began 
attending SRPs to prepare for impending mobilization. The unit first 
attended a program at the Reserve center in Waterbury, Connecticut, in 
October 2001, along with several other units that were definitely 
mobilizing. The soldiers attended a second SRP in November 2002. The 
finance portion of the SRP consisted of a briefing that covered the 
different entitlements soldiers could expect to receive and a review of 
the soldiers' Master Military Pay Accounts. Upon reporting to the 
active Army mobilization station at Fort Lee, the unit underwent a 
third SRP.

We found 10 of the 11 soldiers in the 3423rd Military Intelligence 
Detachment were entitled to the continental U.S. cost of living 
allowance during their mobilization at a rate based on their principal 
place of residence at the time they were ordered to active 
duty.[Footnote 33] One of these 10 soldiers did not receive the 
entitlement during his mobilization, resulting in a $500 underpayment. 
The 9 remaining soldiers erroneously began receiving the overseas cost 
of living allowance rather than the continental U.S. cost of living 
allowance at the beginning of the mobilization. In April 2003, all 9 
soldiers began correctly receiving continental U.S. cost of living 
allowance and the entitlement was paid retroactively in May to 8 of the 
soldiers for the period December 2002 through March 2003.[Footnote 34] 
The erroneous payments of the overseas cost of living allowance were 
collected immediately for 4 of the soldiers, while the erroneous 
payments for the other 4 soldiers were only partially collected later 
in the mobilization. The delay in collecting the overseas cost of 
living allowance for the 4 soldiers resulted in overpayments of over 
$3,500 that were not collected in full by the end of the mobilization. 
One soldier continued to receive the overseas cost of living allowance 
and the continental U.S. cost of living allowance concurrently through 
August 2003, totaling more than $2,500. DOD began to recoup these 
amounts in October 2003. In addition to the overpayments and 
underpayments associated with overseas cost of living allowance 
payments, discrepancies between the overseas and continental U.S. cost 
of living allowance rates for 8 of the 9 soldiers led to over $700 in 
late payments.

We also found that 9 of the 10 soldiers in the 3423rd Military 
Intelligence Detachment received family separation allowance 
overpayments during mobilization. Because of pay clerks' confusion 
regarding family separation allowance entitlement rules, the 9 soldiers 
began receiving the family separation allowance 1 to 3 days earlier 
than they should have, resulting in small overpayments that totaled 
almost $200 for the unit.

Additionally, one soldier in the unit experienced a problem related to 
his basic allowance for housing pay during mobilization. Shortly after 
mobilization, the soldier's basic allowance for housing entitlement 
erroneously switched from the "with dependents" rate to the "without 
dependents" rate for half of December 2002 and for January through 
March 2003. In April 2003, the soldier was repaid basic allowance for 
housing at the "with dependents" rate for January through March 
2003.[Footnote 35] These switches resulted in $800 in payments more 
than 30 days after the soldier was entitled and almost $200 in 
underpayments for the period in December 2002 when the soldier did not 
receive basic allowance for housing at the "with dependents" rate. 
Furthermore, even though the soldier was deployed from his home in 
Connecticut to his active duty location at Fort Belvior in Virginia, he 
did not received his family separation allowance for the entire 
mobilization, creating an estimated $3,000 underpayment.

Pay Problems While Deployed:

As summarized in table 30, we identified a number of pay problems 
associated with active duty pays and allowances during the 3423rd 
Military Intelligence Detachment's deployment while on active duty.

Table 30: Deployment Pay Problems:

Type of pay or allowance: Active duty basic pay; 
Number of soldiers who received late payments: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who received late payments: 1; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 0.

Type of pay or allowance: Foreign language proficiency pay; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 1; 
Number of soldiers who were overpaid: 0.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems with more than one 
type of pay or allowance or more than one type of problem per pay or 
allowance.

[End of table]

Two soldiers experienced individual problems with active duty basic 
pay, basic allowance for housing, and foreign language proficiency pay. 
Additionally, during their deployment to Fort Belvoir, the unit's 
soldiers experienced pay problems related to the basic allowance for 
subsistence provided to enlisted soldiers. Ten of the 11 soldiers in 
the unit experienced some sort of overpayment, underpayment, or late 
payment associated with their deployment.

Two soldiers experienced problems relating to various pay entitlements 
during their deployment. One soldier received about $1,800 in active 
duty basic pay and basic allowance for housing payments more than 30 
days after he was entitled to receive them because of a delay in 
processing his promotion. Another soldier did not receive his foreign 
language proficiency pay for 1 month of his deployment, creating a $100 
underpayment.

While we did not count any of the unit's basic allowance for 
subsistence payments as pay problems because of incomplete 
documentation, seven enlisted soldiers in the unit experienced 
significant confusion over whether they received their correct basic 
allowance for subsistence payments. The unit's enlisted soldiers 
initially received the regular basic allowance for subsistence until 
April 2003. At that time, all basic allowance for subsistence amounts 
paid to these soldiers were collected and a different basic allowance 
for subsistence rate, called "rations in kind not available,"[Footnote 
36] was retroactively paid to these soldiers. In 2003, rations-in-kind-
not-available payments were about $20 more per month than the regular 
basic allowance for subsistence.

However, finance personnel at the Intelligence and Security Command 
(the unit's servicing finance office while deployed at Fort Belvoir) 
determined that even though the unit was issued orders stating that 
housing and mess would not be provided, the soldiers actually could eat 
at the Fort Belvoir mess. This resulted in (1) a collection in May of 
all of the previous rations-in-kind-not available payments to the 
unit's soldiers except for payments for the initial mobilization time 
prior to arrival at Fort Belvoir, and (2) a retroactive repayment of 
the regular basic allowance for subsistence. Nevertheless, the enlisted 
soldiers continued to receive the rations-in-kind-not-available rate 
from mid-May through July 2003. In July 2003, Fort McCoy again 
initiated transactions to collect the rations-in-kind-not-available 
payments and instead pay regular basic allowance for subsistence. The 
regular basic allowance for subsistence then continued for the rest of 
the unit's mobilization, despite the fact that in June 2003, a 
committee of finance personnel at Fort Belvoir determined that it was 
not feasible for the soldiers to continue to use the mess facilities at 
Fort Belvoir because of mission requirements and transportation costs.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

The soldiers of the 3423rd Military Intelligence Detachment began to 
demobilize in November 2003. As summarized in table 31, some soldiers 
continued to experience pay problems throughout their demobilization 
and release from active duty.

Table 31: Demobilization Pay Problems:

Type of pay or allowance: Active duty basic pay; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 9.

Type of pay or allowance: Basic allowance for housing; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 9.

Type of pay or allowance: Basic allowance for subsistence; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 9.

Type of pay or allowance: Family separation allowance; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 8.

Type of pay or allowance: Foreign language proficiency pay; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 1.

Source: GAO analysis.

Note: Soldiers may have experienced pay problems with more than one 
type of pay or allowance or more than one type of problem per pay or 
allowance.

[End of table]

Of the 10 soldiers who demobilized by the end of our audit period, 9 
continued to receive their active duty pay and entitlements past the 
date of separation from the Army. Two of the 9 overpaid soldiers 
continued to receive their entitlements for 28 days past the date of 
demobilization, while the remaining 7 soldiers were overpaid for 13 
days. This resulted in $14,000 in overpayments of active duty basic 
pay, basic allowance for housing, basic allowance for subsistence, and 
where applicable, the family separation allowance and foreign language 
proficiency pay.

When demobilizing through Fort Lee, the demobilization finance 
officials failed to change the pay status code in DJMS-RC to stop 
active duty pay for nine of the unit's soldiers. The timing of the 
unit's release from active duty made it more difficult to catch and 
correct these concerns, as the soldiers demobilized during the 
Thanksgiving holiday and a particularly severe snowstorm. The problem 
was eventually caught and corrected by the 94th Regional Readiness 
Command when personnel examined the Unit Commander's Pay Management 
Report in January 2004. Finance personnel at the 94th Regional 
Readiness Command reported that available pay reports indicated most of 
the soldiers' overpayments have now been collected from the unit's 
soldiers.

[End of section]

Appendix IX: 431st Chemical Detachment Johnstown, Pennsylvania:

The 431st Chemical Detachment was called to active duty in support of 
Operation Enduring Freedom on January 16, 2003, for a period not to 
exceed 365 days. Ten soldiers who received orders to mobilize with the 
431st Chemical Detachment reported to their home station in Johnstown, 
Pennsylvania, on January 16, 2003. They underwent an initial SRP at 
their Johnstown home station. On January 19, 2003, they arrived at 
their designated mobilization station at Fort Dix, New Jersey, where 
they remained for the next month undergoing additional in-processing 
and training. Approximately 1 month later, around February 22, 2003, 8 
of the 10 soldiers from the 431st Chemical Detachment were deployed to 
Kuwait. Two soldiers from the unit left for Kuwait 1 month later, on 
March 20, 2003.

The primary mission of the 431st Chemical Detachment while deployed in 
and around Kuwait was to track and report nuclear, biological, or 
chemical attacks so that soldiers in the area could take appropriate 
protective actions. After completing their mission, all 10 soldiers in 
the detachment left Kuwait on May 21, 2003. Upon returning to Fort Dix, 
the soldiers began the demobilization process and stayed at Fort Dix 
until the end of June 2003. For the period of July 1 through July 15, 
2003, all of the soldiers in the 431st Chemical Detachment were placed 
on transitional leave. By July 15, 2003, all of the soldiers had been 
released from active duty. A time line of key actions associated with 
the unit's mobilization under Operation Enduring Freedom is shown in 
figure 10.

Figure 10: 431st Chemical Detachment's Mobilization Time Line:

[See PDF for image]

[End of figure]

As summarized in table 32, all 10 of the unit's soldiers experienced 
some sort of pay problem, primarily associated with the overseas 
deployment phase of their active duty mobilization. Pay problems 
included overpayments, underpayments, and late payments of pay 
entitlements and incentives, such as family separation allowance, 
hostile fire pay, and hardship duty pay associated with their initial 
mobilization and deployment to Kuwait.

Table 32: Pay Problem by Phase:

Phase: Mobilization; 
Number of soldiers with pay problems: 2 of 10.

Phase: Deployment; 
Number of soldiers with pay problems: 10 of 10.

Phase: Demobilization; 
Number of soldiers with pay problems: 0 of 10.

Source: GAO analysis.

Note: Soldier may have experienced pay problems in more than one phase.

[End of table]

In total, we identified estimated overpayments of about $12,000, 
underpayments of about $2,000, and late payments of about $1,000 
associated with the pay problems we identified. Of the estimated 
$12,000 in identified overpayments, we identified about $450 that was 
subsequently collected. Specifically, we determined that:

* 2 soldiers did not receive correct payments for up to 6 months after 
their mobilization date; and:

* all 10 soldiers in the unit experienced underpayments, overpayments, 
or late payments associated with their tour of active duty deployment 
in Kuwait, including problems with hostile fire pay and hardship duty 
pay.

Mobilization Pay Problems:

As summarized in table 33, we identified six soldiers with pay problems 
related to overpayments of family separation allowance during the 
unit's initial mobilization to active duty.

Table 33: Mobilization Pay Problems:

Type of pay or allowance: Family separation allowance; 
Number of soldiers who received late payments: 0; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 6.

Source: GAO analysis.

[End of table]

Upon receipt of individual mobilization orders, the soldiers reported 
to their unit's home station in Johnstown, Pennsylvania, where they 
attended a SRP. The purpose of this SRP was to ensure that all soldiers 
had all required administrative paperwork, financial documents, and 
were physically fit for the ensuing mobilization. SRP finance officials 
were required to verify the soldiers' supporting financial 
documentation and submit transactions with the necessary supporting 
documentation to the Reserve Pay Center at Fort McCoy to update the 
soldiers' Master Military Pay Accounts to reflect their mobilized 
status.

However, we identified several soldiers who did not have appropriate 
supporting documentation maintained in their files to justify their 
basic allowance for housing payments. One soldier appeared to be 
underpaid for the basic allowance for housing during the period that he 
was called to report to his home station for active duty. During the 
first pay period of his mobilization, he was paid at a lower basic 
allowance for housing rate. Subsequent payments for the basic allowance 
for housing throughout his tour of duty were at a higher rate. We were 
not able to substantiate the higher amount through supporting 
documentation. The total basic allowance for housing payments to this 
soldier that could not be verified amounted to approximately $3,500.

Furthermore, we identified four other soldiers who received basic 
allowance for housing payments for which we were unable to obtain 
supporting documentation (i.e., DA Form 5960). Total basic allowance 
for housing payments for those four soldiers amounted to approximately 
$30,000.

In addition, we identified six soldiers in the 431st Chemical 
Detachment who received overpayments of the family separation allowance 
because they began receiving this entitlement upon reporting to their 
home station, even though that location was less than 50 miles from 
their homes and there was no evidence that they had an unreasonable 
commuting distance, as required by DOD FMR Volume 7A. Based on these 
criteria, the family separation allowance payments should not have 
started until the soldiers reached their mobilization station at Fort 
Dix, New Jersey. The family separation allowance overpayments to these 
soldiers totaled $150.

Pay Problems While Deployed:

As summarized in table 34, we found that during the soldiers' 
deployment to Kuwait, they experienced problems related to hardship 
duty pay and hostile fire pay. In addition, all of the soldiers 
received their combat zone tax exclusion benefit at least 1 month late.

Table 34: Deployment Pay Problems:

Type of pay or allowance: Hostile fire pay; 
Number of soldiers who received late payments: 8; 
Number of soldiers who were underpaid: 0; 
Number of soldiers who were overpaid: 10.

Type of pay or allowance: Hardship duty pay; 
Number of soldiers who received late payments: 1; 
Number of soldiers who were underpaid: 10; 
Number of soldiers who were overpaid: 10.

Source: GAO analysis.

Note: Soldiers may have experienced problems with more than one type of 
pay or allowance.

[End of table]

Most soldiers did not receive the full amount of their hardship duty 
pay while deployed. Moreover, they continued to receive hardship duty 
pay well after they had returned to Fort Dix and demobilized. In total, 
all 10 deployed soldiers were incorrectly paid for either hardship duty 
or hostile fire pay.

Soldiers of the 431st Chemical Detachment who deployed overseas had 
their identification cards scanned into the Tactical Personnel System 
upon landing at Kuwait International Airport. However, the unit's 
hostile fire payments did not start until more than 2 months after the 
soldiers arrived in theater. Moreover, it took approximately 3 months 
from the time that the soldiers arrived to start receiving hardship 
duty payments. In fact, hardship duty payments were not processed until 
May 21, 2003, the same day that the soldiers left the designated 
hardship duty location.

These delays resulted in the deployed soldiers being underpaid for most 
of their time while serving in the hardship duty location. Furthermore, 
hardship duty pay continued for another 7 months after the soldiers had 
left Kuwait. As a result, the soldiers continued to receive payments of 
hardship duty pay after their demobilization and release from active 
duty. Also, local Army area servicing finance officials did not 
terminate payments of hostile fire pay for the 2 months following the 
soldiers' return to the United States. These two breakdowns in the 
process of paying the correct in-theater incentives to soldiers in a 
timely manner resulted in underpayments or late payments at the front 
end of the soldiers' deployment and overpayments after the soldiers had 
returned.

In addition, the unit administrator, who also deployed with the unit, 
stated that she had trouble finding anyone in the local Army area 
servicing finance office in Kuwait to assist with getting the unit's 
hostile fire pay started. Since the 431stChemical Detachment was 
working for the Marine Corps and was far away from the Army area 
servicing finance office, the unit was given the number at Fort Doha as 
its supporting finance office in Kuwait. The unit administrator made 
repeated telephone attempts to contact the finance office at Fort Doha 
but could only reach a recording that told her to call back later. This 
gap in a functioning supporting finance office for the deployed 
soldiers added to their frustration and confusion over in-theater pays.

Upon the unit's return to the U.S. in May 2003, most of the soldiers 
noticed that they continued to receive an additional $100 per month for 
7 additional months. However, because their Leave and Earnings 
Statements were not clear as to what the payments represented, the 
soldiers contacted the unit administrator for assistance. The unit 
administrator determined that the payments represented erroneous 
hardship duty pay and tried to go through the unit's chain of command 
to get the payments stopped, but received no response. The unit 
administrator also accessed the pay hotline at 888-PAY-ARMY, but was 
placed on hold for such a long time that she gave up.

Pay Problems Associated with Demobilization and Release from Active 
Duty:

All 10 soldiers of the 431st Chemical Detachment arrived at the 
demobilization station at Fort Dix, New Jersey, on May 21, 2003, to 
begin the SRP out-processing. The soldiers were stationed at Fort Dix 
for approximately 1 month. At the end of June 2003, the soldiers 
returned to their home station in Johnstown, Pennsylvania, where they 
spent a few days before being placed on transitional leave for the 
first 2 weeks in July 2003. While on transitional leave, the soldiers 
continued to receive $250 per month for the family separation allowance 
even though they were not separated from their families.

[End of section]

Appendix X: Comments from the Department of Defense: 

UNDER SECRETARY OF DEFENSE:
1100 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-1100:

COMPTROLLER:

AUG 11 2004:

Mr. Gregory D. Kutz: 
Director:
Financial Management and Assurance: 
U.S. Government Accountability Office: 
Washington, DC 20548:

Dear Mr. Kutz:

This is the Department of Defense (DoD) response to the Government 
Accountability Office (GAO) Draft Report, "Military Pay: Army Reserve 
Soldiers Mobilized to Active Duty Experienced Significant Pay 
Problems," dated July 9, 2004, (GAO Code 192109/GAO-04-911). The DoD 
concurs with the 15 recommendations in the draft report and is already 
taking actions to correct the noted deficiencies.

The Department appreciates the opportunity to comment on the subject 
report. My staff point of contact on this matter is Ms. Jacqueline 
Jenkins. She may be contacted by e-mail: jacqueline.jenkins@osd.mil or 
by telephone at (703) 697-8282.

Sincerely,

Signed by: 

Tina W. Jonas:

Enclosure: As stated:

GAO DRAFT REPORT - DATED JULY 9, 2004 GAO CODE 192109/GAO-04-911:

"MILITARY PAY: ARMY RESERVE SOLDIERS MOBILIZED TO ACTIVE DUTY 
EXPERIENCED SIGNIFICANT PAY PROBLEMS":

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
establish procedures for unit commanders and unit administrators, or 
other designated officials (for soldiers transferred between units), to 
reconcile the names of Army Reserve soldiers receiving active duty pay 
with the names of Army Reserve soldiers reporting for duty at 
mobilization stations. (p. 70/GAO Draft Report):

DoD RESPONSE: Concur. The Defense Finance and Accounting Service (DFAS) 
will provide procedures for mobilization stations to query the Defense 
Joint Military Pay System - Reserve Component (DJMS-RC) to identify all 
soldiers on a mobilization tour in the system and assigned to a unit 
reporting to the mobilization station. The query results will be 
validated with the unit against the actual personnel reporting to the 
mobilization station. This process will also be incorporated into the 
Army Mobilization/Demobilization Standing Operating Procedures. In 
addition, the United States Army Reserve Command (USARC) is conducting 
a data matching process twice monthly to ensure soldiers' pay status is 
correct. The estimated completion date is November 2004.

RECOMMENDATION 2: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
establish procedures for unit commanders and unit administrators, or 
other designated officials, to provide the names and arrival dates for 
all soldiers entering and exiting in theater locations to a designated 
local area finance office to facilitate accurate and timely payment of 
in-theater location-based active duty pays, allowances, and related tax 
benefits. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. The Army personnel command in theater will 
continue to provide automated listings of all soldiers arriving and 
departing theater using the Tactical Personnel System. This system uses 
a process that populates data based on the soldier physically swiping 
his/her common access card upon arrival/departure. A May 2004 change to 
the system and procedures added the input of a status code for pay 
purposes to the system at the point of embarkation/debarkation. The 
system files are now quality checked against images of hardcopy 
manifests to minimize errors. Action is complete.

RECOMMENDATION 3: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
establish procedures to provide demobilization stations with a list of 
soldiers returning from overseas that are scheduled to arrive at the 
demobilization station for outprocessing. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. The Army Mobilization/Demobilization Standing 
Operating Procedure requires the demobilization finance cell to obtain 
a by-name listing of soldiers by unit arriving at the demobilization 
station. This guidance includes the requirement to achieve 
100 percent accountability for the soldiers in a unit for finance 
demobilization input. This process is now validated through compliance 
reviews for mobilization/demobilization stations. This is in addition 
to the ongoing reconciliation of the DJMS-RC data and Transition 
Processing System DD Form 214 (Certificate of Release or Discharge from 
Active Duty) data and the transmission of departure data from the 
Tactical Personnel System directly to DFAS. Action is complete.

RECOMMENDATION 4: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
establish procedures to reconcile the names of Army Reserve soldiers, 
who recently demobilized, with the names of Army Reserve soldiers still 
receiving mobilization pay and take appropriate action to resolve any 
identified pay issues. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. A centralized automated reconciliation of the 
DJMS-RC data and the Transition Processing System DD Form 214 data is 
now performed with followup of discrepancies at the individual 
mobilization stations. Action is complete.

RECOMMENDATION 5: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), clarify 
policy concerning "thorough" review of soldiers pay records upon 
initial mobilization to specify that finance personnel at Army 
mobilization stations must conduct a one-on-one review of on-line pay 
records for each mobilized soldier. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. Policy was initially published in January 2004 
and is also included in the Army Mobilization/Demobilization Standing 
Operating Procedure. This process is now validated through compliance 
reviews for mobilization/demobilization stations. Action is complete.

RECOMMENDATION 6: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
establish procedures to ensure unit commanders and unit administrators, 
or other designated officials, have on-line access to pay management 
reports, such as the Unit Commander's Pay Management Report, 
particularly for mobilized units. (p. 7 1/GAO Draft Report):

DoD RESPONSE: Concur. Processes and capabilities will be established to 
ensure that Unit Commander's Pay Management Reports are produced and 
distributed to units while away from home station during periods of 
mobilization. The feasibility of on-line access will be evaluated; 
however, units deployed to austere environments often do not have the 
communications to obtain access. The estimated completion date is 
November 2004.

RECOMMENDATION 7: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), clarify 
the DJMS-RC procedures to specifically require unit commanders, unit 
administrators, or other designated officials, to review and reconcile 
key pay and personnel data every month, including personnel records, 
with the monthly Unit Commander's Pay Management Report, for all 
mobilized Army Reserve soldiers. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. The USARC will update the DJMS-RC Procedures 
Manual (USARC Pamphlet 37-1) to more clearly define procedures for use 
of the Unit Commander's Pay Management Report during mobilization. The 
USARC will also publish this requirement through command channels. The 
estimated completion date is February 2005.

RECOMMENDATION 8: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), clarify 
and simplify procedures and forms implementing Family Separation 
Allowance entitlement policy, particularly with respect to 30-day 
waiting period and commuting distance criteria. (p. 71/GAO Draft 
Report):

DoD RESPONSE: Concur. The Army, in conjunction with the DFAS, will 
review and, within legislative constraints, update appropriate policy, 
procedures, and forms used in the authorization of Family Separation 
Allowance in relation to the 30-day waiting period and commuting 
distance criteria. The estimated completion date is 3rd quarter 2005.

RECOMMENDATION 9: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), take 
appropriate action to address the issues of inadequate resources 
provided to carry out key unit administrator pay management 
responsibilities identified at our case study units, particularly with 
respect to: (1) vacancies in unit administrator positions resulting 
from the requirement for "dual status" unit administrators; and (2) 
lack of pay management support for Army Reserve soldiers transferred 
between units. (p. 71 /GAO Draft Report):

DoD RESPONSE: Concur. The USARC recognized problems caused by the lack 
of availability of unit administrators. The Chief, Army Reserve 
approved the Army Reserve Human Capital Strategic Plan for the Full-
Time Support Workforce, which includes unit administration support. The 
strategic plan consolidates administrative support, to include pay, 
into a Center Support Concept that provides unit administrative 
support. The centralized administrative cell is planned to be supported 
by military technician positions with corresponding drilling reserve 
positions, so during periods of military duty, the unit administrator:

will remain at the reserve center performing the same functions. By 
pooling unit administration resources and responsibilities within a 
reserve center, there will be continuity of administrative support for 
units even during absences or vacancies for individual administrators. 
The USARC is currently conducting a pilot program at one of the 
Regional Readiness Commands that runs from July 1, 2004, through 
December 30, 2004. In addition, the USARC will promulgate guidance 
emphasizing the responsibility of the parent unit administration to 
support all soldiers assigned to a derivative unit, including those 
soldiers cross-leveled from other units. This guidance will include 
conducting Soldier Readiness Processing for cross-leveled soldiers from 
other units or the Individual Ready Reserves. The estimated completion 
date is October 2006.

RECOMMENDATION 10: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), 
determine whether issues of inadequate resources identified at our case 
study units apply to other mobilized Army Reserve units and soldiers, 
and if so, take appropriate action to address any deficiencies 
identified. (p. 71/GAO Draft Report):

DoD RESPONSE: Concur. The USARC has determined that of the 1,993 unit 
administrator positions in the command, 395 (20 percent) are 
temporarily vacant due to the incumbent serving on active duty. Only 
101 (5 percent) are vacant awaiting a new personnel selection. Action 
is complete.

RECOMMENDATION 11: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), evaluate 
the feasibility of establishing an ombudsman to serve as the single 
focal point and have overall coordination responsibility and visibility 
to ensure that all Army Reserve soldiers' problems and inquiries, with 
respect to applicable active duty pays, allowances, and related combat 
zone tax exclusion benefits, are promptly and fully resolved. (p. 71 /
GAO Draft Report):

DoD RESPONSE: Concur. The USARC will build upon the existing 
mobilization helpdesk/support cell established in May 2003 at the 
United States Army Reserve Pay Center. The availability of the cell, 
which has responded to over 13,300 requests from individuals and 
organizations, will be further enhanced through the addition of toll-
free help lines and wider advertising of the help lines as a pay 
ombudsman for mobilized soldiers. The estimated completion date is 
November 2004.

RECOMMENDATION 12: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), evaluate 
the feasibility of modifying the deployability code or adding a duty 
status code in the Total Army Personnel Database-Reserves (TAPDB-R) 
that can be compared with the pay status code field in the DJMS-RC to 
assist in identifying pay errors resulting from discrepancies between 
the soldiers' duty status and pay status. (p. 72/GAO Draft Report):

DoD RESPONSE: Concur. The Army Human Resources Command already 
maintains a mobilization status code in the TAPDB-R and is adding a 
mobilization status to the record status code values. In addition, the 
active Army personnel databases also have fields established for 
mobilized reservists. The feasibility will be evaluated of using one of 
these fields for comparison to the pay status code in the DJMS-RC. The 
specific field value and database will be based on the systems and 
processes through which it is populated (i.e., based on orders or 
actual arrival at the mobilization station). The estimated completion 
date is November 2004.

RECOMMENDATION 13: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), evaluate 
the feasibility of modifying the DJMS-RC to stop withholding taxes from 
soldiers when they serve in designated tax-exempt combat zones. (p. 72/
GAO Draft Report):

DoD RESPONSE: Concur. The DFAS completed a feasibility assessment, and 
the DJMS-RC would require a systems change to stop the withholding of 
taxes in tax-exempt combat zones. The systems change would take 12-18 
months to implement. Since the implementation would be after the Army 
Reserve accounts conversion to the Forward Compatible Pay (FCP) system, 
a change to the DJMS-RC is not feasible. The issue will be resolved 
upon FCP implementation in spring 2005.

RECOMMENDATION 14: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), evaluate 
the feasibility of establishing a system edit to prevent DJMS-RC from 
generating payments for active duty service to soldiers after their 
date of demobilization from active duty. (p. 72/GAO Draft Report):

DoD RESPONSE: Concur. The DFAS completed a feasibility assessment, and 
the DJMS-RC would require a systems change to modify the process to 
prevent the payments after demobilization. The systems change would 
take 12-18 months to implement. Since the implementation would be after 
the Army Reserve accounts conversion to the FCP system, a change to the 
DJMS-RC is not feasible. The issue will be resolved upon FCP 
implementation in spring 2005.

RECOMMENDATION 15: The GAO recommended that the Secretary of Army, in 
conjunction with the Under Secretary of Defense (Comptroller), address 
the deficiencies noted in this report as part of the functional 
requirements for the FCP and the Defense Integrated Military Human 
Resources System (DIMHRS) system development efforts currently 
underway. (p. 72/GAO Draft Report):

DoD RESPONSE: Concur. The Department has addressed the deficiencies 
noted in the report by creating detailed military pay requirements for 
the DIMHRS Program. These detailed military pay requirements are also 
being used as the requirements baseline for the FCP system. These 
requirements address pay problems resulting from systemic issues 
identified in this report. Specifically, the requirements establish an 
integrated single record for all military members 
(Active, Reserve, and Guard). The single record will support seamless 
status transition as military members are mobilized/demobilized. The 
current Reserve system requirement to reenter entitlements monthly will 
be eliminated. Duty status changes from Reserve to Active, will 
automatically initiate basic pay and allowances (e.g., basic allowance 
for housing, basic allowance for subsistence) and enable one time entry 
to start/stop location based entitlements (e.g., hazardous duty pay) 
and current non automated entitlements (e.g., foreign language 
proficiency pay) eliminating the need for monthly reentry of 
entitlements. Automation of all entitlements and allowances will: (1) 
reduce manual workarounds, (2) enhance edits and validations, (3) 
improve pay accuracy, and (4) reduce the workload of field finance 
offices. The DIMHRS is envisioned to create a single military 
personnel/pay record for each Service member supporting all Service 
Component affiliations and duty statuses and will resolve any residual 
pay problems associated with personnel and pay interfaces. The FCP will 
begin deployment in spring 2005 and complete its deployments by spring 
2006. 

[End of section]

Appendix XI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Geoffrey B. Frank, (202) 512-9518: 

Acknowledgments: 

Staff making key contributions to this report include James D. Berry, 
Amy C. Chang, Francine M. DelVecchio, Jennifer L. Hall, Ken Hill, 
Kristi L. Karls, Jason M. Kelly, Tram Le, Julia C. Matta, Jonathan T. 
Meyer, Michelle Philpott, John J. Ryan, Jennifer F. Wilson, and Leonard 
E. Zapata.

(192109): 

FOOTNOTES

[1] GAO, Military Pay: Army National Guard Personnel Mobilized to 
Active Duty Experienced Significant Pay Problems, GAO-04-89 
(Washington, D.C.: Nov. 13, 2003).

[2] U.S. Department of Defense, Report to Congress: Defense Integrated 
Military Human Resource System (Personnel and Pay), (Washington, D.C.: 
June 2002).

[3] The Army Reserve provides combat support through its Military 
Police, Chemical, and Military Intelligence units; and combat service 
support through units, such as its Medical, Quartermaster (supply), and 
Transportation units.

[4] The Ready Reserve includes about 211,000 members of the Selected 
Reserve (Army Reserve soldiers participating in regularly scheduled 
training and consequently most readily available for mobilization) and 
about another 117,000 members of the Individual Ready Reserve (many of 
whom recently left active duty but still have a Reserve commitment or 
were previously in the Selected Reserve, but are not currently 
participating in any regularly scheduled drills or training). In 
addition, the Army Reserve reported that it had over 700,000 retirees 
in its Retired Reserve. 

[5] 10 U.S.C. Sec. 12305.

[6] Those affected by the order generally cannot voluntarily retire, 
leave active duty, or separate from the service as long as reserves are 
called to active duty or until otherwise relieved by proper authority.

[7] Through this action, Army Reserve soldiers on active duty orders 
covering a period of 365 days from the date of their original 
mobilization orders were extended on active duty for a period of 730 
days. 

[8] Reserve components include the Army National Guard, Army Reserve, 
Air National Guard, Air Force Reserve, Naval Reserve, Marine Corps 
Reserve, and Coast Guard Reserve.

[9] The law makes a distinction between the terms "pays" and 
"allowances," which together make up a service member's overall 
compensation package. Generally, the term pay includes basic pay, 
special pay, retainer pay, incentive pay, retired pay, and equivalent 
pay, but does not include allowances. 37 U.S.C. Section 101(21). DOD 
defines allowance as "a monetary amount paid to an individual in lieu 
of furnished quarters, subsistence, or the like." DOD Financial 
Management Regulation, vol. 7A, Definitions, para. 15 (February 2001). 
While generally items considered as "pay" are taxable for federal 
income tax purposes, except for the cost of living allowance for the 
continental United States, most allowances, such as those for housing, 
subsistence, and family separation, are not. 

[10] There is no limit on the military pay exemption for enlisted Army 
Reserve members, but there is an annual limit of about $76,000 for 
officers. 

[11] In November 1988, the Under Secretary of the Army approved the use 
of the Air Force military pay system to pay Army active and reserve 
soldiers.

[12] U.S. Army Audit Agency, Identification of Soldiers in Deserter or 
Absentee Status, A-2003-0009-FFG (Washington, D.C.: Nov. 13, 2002).

[13] Over-and underwithholding of taxes associated with the combat zone 
tax exclusion can be corrected when Army Reserve soldiers file their 
tax returns if their W-2 form reflects the correct amount of taxable 
income. 

[14] These reports provide summaries of pay-and personnel-related 
information on soldiers in the unit. 

[15] DOD's FMR defines "within a reasonable commuting distance" as 
within 50 miles one way, unless the soldier is commuting daily. The FMR 
also permits the commander to authorize a soldier to receive FSA 
payments, even though the soldier's dependents live within 50 miles of 
the soldier's duty station, based on a determination that the required 
commute is not reasonable.

[16] The Army Reserve Readiness Training Center located in Fort McCoy, 
Wisconsin, offers both courses. The courses, in part, cover processing 
personnel and payroll transactions, maintaining personnel and payroll 
data, identifying soldiers' training requirements, mobilization 
procedures, and logistics. 

[17] For this unit, the unit administrator did not deploy with the 
unit. Consequently, the unit's pay management responsibilities were 
assigned to a finance sergeant deployed with the unit.

[18] GAO-04-89.

[19] In 1993, we reported the lack of an interface between military 
personnel and pay systems as a material weakness. In response, a 
limited interface was implemented in July 1997, which allows certain 
data in the personnel system, TAPDB-R, to establish and update certain 
data in the pay system, DJMS-RC, daily. However, this interface was 
established for only five data fields--soldiers' names, Social Security 
numbers, soldiers' entry into the Army, soldiers' reassignments, and 
soldiers' separations from military service. As a result, this limited 
interface did not incorporate the data elements needed by the payroll 
system to process payments for soldiers on active duty. 

[20] 26 U.S.C. Section 112.

[21] GAO-04-89.

[22] GAO, Standards for Internal Control in The Federal Government, 
GAO/AIMD-00-21.3.1 (Washington D.C.: November 1999). These standards 
provide the overall framework for establishing and maintaining 
effective internal control and for identifying and addressing areas of 
greatest risk of fraud, waste, abuse, and mismanagement. 

[23] The 965th Medical Company Dental Area Support is referred to as 
the 965th Dental Company in this report.

[24] The 965th Dental Company is a subordinate unit of the 807th 
Medical Command, which is the Army's III Corps medical brigade.

[25] The two soldiers were still on medical hold at the time of our 
review.

[26] This soldier was still receiving pay during the time of our 
review. We notified the unit administrator and after our site visit the 
pay was stopped and the soldier incurred a debt balance for the total 
amount overpaid.

[27] The order mobilizing the 948th Forward Surgical Team states that 
physicians and nurse anesthetists were to deploy for only 90 days in a 
theater unless they voluntarily extended their tour with the approval 
of the command authority.

[28] Initially, the soldiers were to receive $150 as their hostile fire 
pay, but in April 2003, Congress increased the amount of hostile fire 
pay to $225 and made the $75 increase retroactive to October 2002. In 
May 2003, DFAS implemented the hostile fire pay increase and initiated 
action to disburse the $75 retroactive payments. 

[29] This mobilization falls outside of the audit period for this 
report and is therefore only considered for its impact on the second 
mobilization.

[30] The Army's Individual Ready Reserve members do not participate in 
any regularly scheduled training and are not paid for their membership 
in the Ready Reserve. Each year, the Army transfers thousands of 
soldiers who have completed active duty or Selected Reserve commitments 
to the Individual Ready Reserve. Individual Ready Reserve soldiers can 
be mobilized to active duty to help meet requirements. 

[31] Three soldiers did not deploy with the unit. One soldier had 
documentation supporting a medical condition that made him medically 
unfit for mobilization. Another soldier had his orders revoked the day 
after mobilization. The third soldier was mobilized but stayed behind 
in a medical hold status. 

[32] A 12th soldier was mobilized from June 2002 to June 2003, but was 
not part of this mission.

[33] The 11th soldier was not entitled to the continental U.S. cost of 
living allowance because his principal place of residence did not 
qualify for a cost of living adjustment.

[34] The 9th soldier did not have his overseas cost of living 
adjustment recollected and the continental U.S. cost of living 
adjustment paid instead, creating a $2 underpayment.

[35] The basic allowance for housing previously paid under the "without 
dependents" rate was recollected concurrently with the April 2003 
payment.

[36] According to DOD FMR Volume 7A, in general, "rations in kind not 
available" applies to enlisted soldiers on duty at a permanent station 
where a government mess is not available or is impracticable for the 
soldiers to use. 

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