department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 • Continued work with Contracting Officers to simplify contract terms and eliminate the need for manual calculations. The Department is very pleased with the continuing success of its pre-payment review using BAM. Since its initial roll out in August 2008, more than $4.5 billion in improper payments have been prevented. The ongoing payment error analyses allow for the continual enhancement of BAM logic and improved disbursement accuracy. Another initiative to reduce improper payments includes outreach to reduce vendor billing errors caused by duplicate manual and electronic submission of invoices. In addition, the Department conducts manual reviews to ensure it meets all Certifying Officer Legislation requirements prior to certifying payment, such as ensuring proper documentation and correct payment amounts before disbursement. USACE Commercial Pay. As shown in Figure A-8, the USACE projects 0.03 percent in improper payments for Commercial Pay. The USACE functions as the real estate agency for the Department, as they have responsibility for leasing office space for all military recruiters. This applies to small offices in rural and semi-rural areas as well as larger spaces in more urban areas. Root Cause. Commercial rental properties change hands fairly frequently; however, USACE is often not informed of the change in ownership. Therefore, improper payments occur as a result of the wrong lessor being paid (or an incorrect property manager). In these instances, staff is counseled to immediately notify the appropriate individuals when ownership or property A-62 Figure A-8. Improper Payment Rate – USACE Commercial Pay 0.06% 0.04% 0.02% 0.00% management companies have changed to prevent future payment errors of this type. B10-44 In addition, some overpayments are identified during contract close-out. When an overpayment is identified, the final invoice is offset and/or an account receivable is established with a demand letter sent to recover the amount. Other errors are caused by input errors, such as improper identification of the Commercial Activity Government Entity (CAGE) code when establishing contracts in CEFMS. Many corporations have multiple CAGE codes. Corrective Actions. When improper payments are identified, the USACE Finance Center notifies the parties involved with the payments to determine the circumstances and to assist in identifying business process improvements to prevent recurrences. 0.02% 0.04% FY 2012 Target 0.04% FY 2010 FY 2011 FY 2012 FY 2013 Target 0.03% 0.03% 0.03% 0.03% FY 2014 Target FY 2015 Target Addendum A
Department of Defense Agency Financial Report for FY 2012 Recoveries of Improper Payments In compliance with IPERA as well as the Debt Collection Improvement Act of 1996, the Department uses a number of methods to prevent, identify, and collect improper payments, to include contract claims auditing by an EIC utilized by TMA and internal DoD staff to recapture overpayments and manage debt collection. For example, DFAS has implemented a Centralized Offset Program (COP) to look across the Defense agencies for opportunities to offset debts within the first 90 days of delinquency. Once this deadline passes, DFAS transfers the debts to the Treasury Department, no longer waiting until day 180, as allowed by statute, to utilize all debt collection tools available earlier in the debt lifecycle to increase the likelihood of collecting the debt. During FY 2012, COP requested and confirmed nearly 1,200 offsets totaling approximately $13 million. The Department also is working on initiatives to standardize Treasury FedDebt profiles for all DoD programs and establish new cross-servicing programs for many of our medical installations that are operated by TMA and the Army Medical Command. Referrals to Treasury for delinquent debt collection in these categories should increase dramatically during FY 2013. The USACE Finance Center utilizes a data mining tool as part of its post-payment/payment recapture program. This tool searches to identify potential errors such as duplicate, missing, or suspicious invoices, as well as specific types of recurring payments. There are ten scenarios built into the data mining tool, which processes 100 percent of all contract payments. The use of a data-mining tool complements the pre-payment system edits built into CEFMS. Safeguards include a requirement for matching a receiving report with an invoice and prevent use of duplicate invoice numbers for the same obligation. Program Improper Payment Reporting Table 4, below, summarizes DoD’s improper payment reduction outlook and total program outlays (payments) from FY 2011 through FY 2015. A-63 Addendum A
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