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B-279620 1 (1998-03-31)

handle is hein.gao/gaobadsko0001 and id is 1 raw text is: LEI? a Comptroller General of the United States Washington, D.C. 20548 B-279620 March 31, 1998 The Honorable Charles E. Grassley United States Senate Dear Senator Grassley: This letter responds to your concern about a provision in the proposed Department of Defense (DOD) Reform Act that would permit DOD to use a combination of fast pay and statistical sampling procedures to verify receipt and acceptance of goods and services after payment. Your March 16, 1998, letter asked for our position on DOD's proposal. Section 401 would provide DOD with independent authority to implement a vendor payment process commonly referred to as fast pay. Using a fast pay process, DOD would pay vendors subject to post-payment verification of (1) receipt and acceptance of goods and services ordered and (2) the accuracy of invoices received. Section 401 directs DOD to perform its postpayment verification using statistical sampling procedures. DOD's proposal does not contain a dollar limitation for payments that would be subject to the fast pay procedures. The Office of Management and Budget (OMB) Circular A-125, Prompt Payment, Part 13 of the Federal Acquisition Regulation (FAR), and Title 7 of GAO's Policy and Procedures Manual for Guidance of Federal Agencies authorize agencies to implement fast pay processes using certain controls, which minimize the exposure of loss to the government. Separate legislative authority is not necessary for an agency that intends to follow these requirements. DOD currently lacks adequate systems and controls over payments as evidenced by the $22.7 billion in DOD's reported problem disbursements. DOD should first demonstrate that it can meet the control requirements currently prescribed in OMB Circular A-125, Part 13 of the FAR, and Title 7 of GAO's Policy and Procedures Manual followed by other federal agencies, before it implements fast pay procedures. A TYPICAL PAYMENT PROCESS Federal agency payment processes typically follow certain procedures which are designed to provide adequate controls to ensure that payments are proper. For example, agencies initiate a purchase order to obtain goods or services for

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