Debt Collection

Improper payments are a long-standing problem throughout the government. The Department of Defense (DOD) has been overpaying contractors by hundreds of millions of dollars each year. For fiscal years 1994 through 1999, DOD contractors returned nearly $1.2 billion that the Defense Finance and Accounting Service (DFAS) had mistakenly paid them as a result of errors, such as paying the same invoice twice or misreading invoice amounts. Sometimes, however, the contractors do not promptly respond to government demands that the overpayments be returned. The Debt Management Office was created at the DFAS Columbus Center to deal with contractors that are unresponsive to the government's demands that overpayments be returned. GAO found that the Debt Management Office at DFAS Columbus is not effectively and proactively pursuing collections of debts assigned to it. Specifically, the Office is not (1) taking appropriate action to establish the validity of the debts that it receives for collection, (2) promptly issuing letters demanding payment, (3) actively communicating with contractors or resolving issues related to the debts, and (4) effectively using the Department of the Treasury's centralized debt collection programs to maximize collections and the Defense Criminal Investigative Service to pursue potential fraud. Ineffective and insufficient efforts by the Office are the results of both deficiencies in and lack of adherence to policies and procedures.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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