Although some of the initiatives include planned improvements to both contract and vendor payment processes, we focused on the contract payment process in this report. Background

The following sections describe DOD’s current contract payment process, the controls necessary to ensure accurate contract payment, and DOD’s long-standing problems with matching disbursements to corresponding obligations. As of September 30, 1997, DOD had at least $22.7 billion in problem disbursements. DOD has hundreds of efforts under way to help resolve disbursement and accounting problems, including the seven technology initiatives discussed in this report. However, as we have previously reported, DOD has not performed the in-depth analysis necessary to fully determine the underlying causes of its disbursement and accounting problems and therefore identify the most effective solutions and rank specific reforms. While these initiatives move DOD closer to a paper free environment, they will not allow DOD to meet the Secretary of Defense’s recently established goal of a paper-free contracting process by the year 2000, since three of the four long-term initiatives are not scheduled for completion until the end of fiscal year 2001. However, MOCAS is usually not provided with information that identifies the cost of the work accomplished with a specific funding source. Therefore, DOD is unable to ensure that payments are being made from the appropriate funding source. Accurate payments can only be made if accurate and complete data are available—regardless of which system is used. The system, as designed, will replace the contract payment functions currently in MOCAS.
Why GAO Did This Study

Pursuant to a congressional request, GAO reported on seven technological initiatives that the Department of Defense (DOD) identified as key elements of its efforts to improve the contract payment process, focusing on DOD's goal of adopting the best business practices of the private sector.

What GAO Found

GAO noted that: (1) the descriptive information presented in GAO's letter highlights several areas of concern that could prevent DOD from meeting its goal of a paperless contracting process by the year 2000; (2) for example, even if DOD successfully meets the current schedule, as of September 30, 1997, three of the four long-term initiatives are not scheduled for completion until the end of fiscal year 2001; (3) in addition, the initiatives may not eliminate the weaknesses in the contract payment processing; (4) as GAO previously reported, although DOD has numerous initiatives under way to help resolve its disbursement and accounting problems, it has not performed the in-depth analysis necessary to fully determine the underlying causes of these problems and therefore identify the most effective solutions and rank specific reforms; (5) as a result, as with its other initiatives, the extent to which these seven technology initiatives discussed in GAO's letter will resolve DOD's long-standing disbursement problems is unclear; (6) even in a highly automated and paperless environment, proper payments can only be made by ensuring that accurate and complete data are available in the systems; and (7) for example, for some types of payments, unless provided with information that identifies the cost of work accomplished with the appropriate funding source, the new systems and databases will not have the information necessary to ensure that proper payments are made.