Financial Management

This report provides information on seven technological initiatives that the Defense Department (DOD) has identified as central to its efforts to improve the contract payment process. DOD has long recognized weaknesses in its contract payment process and has hundreds of initiatives under way to overcome them. In his November 1997 Defense Reform Initiative Report, the Secretary of Defense indicated that DOD must adopt and adapt the lessons of the private sector if America's armed forces are to maintain their competitive edge in the rapidly changing global security arena. The Secretary announced that all aspects of the contracting process for major weapons systems must be paper free by January 1, 2000. The seven technology initiatives described in this report are intended, in part, to help meet this goal.

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.