department of defense agency financial report fiscal year 2012

Department of Defense Agency Financial Report for FY 2012
corrective actions. The Department is committed to complying with all laws and
regulations established to reduce improper payments. As reported in DoD IG Report
No. D-2012-065, the Department is compliant with the requirements of the Improper
Payments Elimination and Recovery Act (IPERA). Beginning in FY 2012, the Department
instituted statistical sampling for commercial payments disbursed by DFAS.
Since the Department first reported on improper payments in the FY 2004 Performance
and Accountability Report, improper payment rates have declined. The Office of
Management and Budget (OMB) reported the government-wide FY 2011 error rate for
improper payments at 5.49 percent, which is substantially higher than each of DoD’s
programs 1 . Further, OMB has not designated any of DoD’s programs to be a high error
program, as shown on the PaymentAccuracy.gov web site.
The Department does not agree with the IG’s statement that deficiencies in the
Department’s initial High Dollar Improper Payment Report, as reported in DoD IG Report
No. D-2011-050, present a significant management challenge. The cited report was
based on information from Quarter 3, FY 2010 – more than two years ago, and all
13 open recommendations have been successfully closed.
The Department does not have a “pay and chase” practice, as cited above by the
DoD IG, where contractors are paid before the Department determines the correct
billing. In Audit Report No. D-2011-050, the DoD IG used the phrase, ‘pay and chase’
when referring to a DFAS review of travel pay among different systems. The DCAA
performs risk-based voucher reviews to proactively keep contractor billings aligned with
final amounts and rates, not ‘pay and chase,’ and it is an important part of the
Department’s audit readiness efforts. The DCAA is diligently working to reduce its
current audit inventory and is making progress.
2. IG-Identified Challenge: Acquisition Processes and Contract
Management
2-1A. Enhancing the Acquisition Workforce IG Summary of Challenge
The Department continues to struggle with its efforts to rebuild an acquisition workforce
that is sufficient in size and adequately trained and equipped to oversee DoD
acquisitions. Even though the Defense acquisition workforce has grown over the last few
years, the Department still faces significant challenges in order to sustain a successful
and well trained Defense acquisition workforce. These challenges include: 17 percent of
the acquisition workforce is eligible for full retirement today; 19 percent are eligible
within 5 years; and personnel losses spiked up 3 percent from FY 2010 to FY 2011. The
Department needs to continue to provide developmental opportunities to the Defense
acquisition workforce to have personnel who can successfully manage complex
acquisition programs in the Department. Regardless of the looming decline in the
Defense budget, the vital role the acquisition workforce plays in providing the
warfighters with new capabilities will remain. Previous Defense budget cuts decimated
the capability of the acquisition workforce; a mistake the Department can ill afford to
repeat.
1 The Fiscal Year 2011 DoD Agency Financial Report showed the overall Department error rate at 0.18 percent;
however, DFAS commercial payments included in this figure were an actual amount, not a statistical estimate.
A-9
Addendum A