DoD has a process in place for monitoring and reporting on late-payment penalties but the process has significant flaws and omissions that result in incomplete and inaccurate data, thereby limiting the effectiveness of the process, GAO has said.
Under the Prompt Payment Act, executive agencies, including DoD, are required to pay late-payment penalties when they do not pay their invoices for commercial payments on time – and DoD’s implementing regulations provide that DoD components should take advantage of discounts offered when a contract or invoice allows an economically justified discount for early payment, according to GAO-12-662R.
It said the department’s 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.
Further, GAO found that DoD was not monitoring or reporting on discounts lost across the department because, according to DoD officials, the metric had consistently met its goal.
DoD said it planned to establish procedures for identifying all systems that process commercial payments, validating completeness and accuracy of late-payment penalty metric data, and monitoring discounts lost.
