Defense Finance and Accounting Service

The Defense Finance and Accounting Service (DFAS), under the U.S. Department of Defense, provides finance and accounting services for the military and other members of defense.

In FY 2004, DFAS:

• Processed 104M pay transactions to 5.9M military, civilians, retirees and annuitants
• Made 6.9M travel payments
• Paid 12.6M commercial invoices
• Processed 127.3M general ledger postings
• Managed military and health benefits funds ($234B)
• Made an average of $455B in disbursements to pay recipients
• Managed $13.5B in foreign military sales (reimbursed by foreign governments)
• Accounted for 282 active DoD appropriations

History

In 1991, the Secretary of Defense created the Defense Finance and Accounting Service to reduce the cost of Defense Department finance and accounting operations and to strengthen financial management through consolidation of finance and accounting activities across the department. Since inception, DFAS has consolidated more than 300 installation-level finance and accounting offices into 26, and reduced the work force from about 27,000 to approximately 16,000 personnel.

DFAS is financed by its customers rather than through direct appropriations. This service-provider relationship with its customers pushes DFAS to seek continuous innovation and improvement in the quality of services it provides. DFAS has steadily reduced its operating costs and has returned these savings to customers in the form of decreased bills.

DFAS has come under increased scrutiny in recent years for widespread and rampant problems in administration of their duties.

DFAS has been investigated and widely criticized for failing to pay soldiers, most notably those called to duty during the post 9–11 period, and for making unsubstantiated claims against veterans. (See Federal Times, March 28, 2005, citing a GAO study. See also, Testimony of Major George W. Riggins Before the House of Representatives Subcommittee on Government Efficiency and Financial Management, July 20, 2004).

DFAS has also been found to outsource work that would have been more cheaply done by government workers. For example, the Department of Defense Inspector General found that DFAS made a "glaring error" that resulted in out sourcing of work to a private contractor that cost the government $30,000,000. The Inspector General also found that the DFAS contract did not include adequate performance standards by which the agency could hold the contractor accountable. (See OMB Circular A-76, Update, 2001).

External links

• http://www.dod.mil/dfas/