Improvements Needed in Prompt Payment Monitoring and Reporting
June 26, 2012
We found that while DOD has a process in place for monitoring and reporting on late-payment penalties, this process has significant flaws and omissions that result in incomplete and inaccurate data, thereby limiting the effectiveness of the process. Specifically, DOD's performance measure, or metric, for late-payment penalties did not include about $54 billion of commercial payments subject to the Prompt Payment Act, and DOD did not assess the data for accuracy or completeness. In addition, at the time of our review, DOD was not monitoring or reporting on discounts lost across the department because, DOD officials stated, the metric had consistently met its goal. The deficiencies we found in DOD's process for monitoring and reporting on late-payment penalties and discounts lost significantly increase the risk to the accuracy and completeness of reported data, thus preventing DOD officials and congressional oversight committees from obtaining the reliable and comprehensive data they need for assessing the extent of any issues concerning late-payment penalties and discounts lost across DOD. According to DOD officials and reports, a major contributor to late-payment penalties incurred and discounts lost was the late receipt of documents necessary to validate receipt and acceptance of goods or services and make payments. We are recommending that DOD establish procedures for identifying all DOD systems that process commercial payments, validating completeness and accuracy of late-payment penalty metric data, and monitoring discounts lost. In commenting on a draft of our report, DOD concurred with our recommendations and cited planned corrective actions to address the issues that gave rise to our recommendations.