# DLAD PGI

- SUBPART 13.4 – Fast Payment Procedures

- PGI 13.402 Conditions for Use

SUBPART 13.4 – Fast Payment Procedures

PGI 13.402 Conditions for Use

(f)(1)(91)(A) In order for an entity to use fast payment procedures, the FAR and the DOD Financial Management Regulation (FMR, DOD 7000.14R, volume 10, chapter 10, §1003) both require that a system be in place to ensure documentary evidence of contractor performance. To the extent that we utilize fast pay when acquiring goods or services for our own consumption (e.g., base supplies), this is not ordinarily a problem, since goods receipts are recorded through the Base Operating Supply System (BOSS) and interfaced into SAP, the Enterprise Business System (EBS) accounting system. Ordinarily, this is accomplished automatically. However, if the obligation was created manually in SAP by the acquisition specialist, the goods receipt will also be manually created in EBS by the installation support receiver. (See EBS Job Aids FI-JOB-0029 (“BOSS BSM Interfund Manual Obligations”), FI-PRO-0031 (“BOSS Non-Material Purchasing”), FI-JOB-0032 (“Manual Creation of Non-BOSS PO on Contract”) and FI-JOB-0033 (“Installation Support Receiver”) for additional information on the receipting process and on BOSS, generally.) Because DLA acquires supplies on behalf of its military customers, however, receipt documentation is not always provided to us in a timely manner. Every opportunity should be taken to remind customers that receipt documentation must always be provided to DLA, even when the contractor is paid via fast-pay procedures. For example, if a copy of the award is provided to the customer, a notice should be included in the package, reminding of the responsibility to acknowledge receipt, so that payment can be verified.

(B) Use of fast pay requires a true and complete documentary reconciliation process by which receipt documentation (goods receipt or receiving report) is compared with contracting (purchase order or requisition) and accounting and payment data (invoice), after payment has been made by the Defense Finance & Accounting Service (DFAS). That is, actual receipts must be compared with order/contract requirements and actual payments to determine whether the vendor was paid properly. While 100-percent matching of these transactions for verification purposes may not be feasible, lack of adequate reconciliation could constitute an Anti-Deficiency Act violation. Therefore, the minimum acceptable verification (that is, post-disbursement matching) is review of a statistically valid sample of acquisitions valued up to $100,000 for which fast pay has been used. Every transaction in fast pay acquisitions with values greater than $100,000 must undergo this reconciliation process; sampling is not permitted for these acquisitions.

(C) Acquisition specialists, with the assistance of DLA customer account specialists and Order Fulfillment resolution specialists, are to perform fast-pay validations. The contracting personnel are responsible for resolving delinquent contract lines; Order Fulfillment specialists deal with sales order closures. The debt-collection aspect of fast-pay reconciliation (for a contractor’s failure to repair, replace, or correct supplies that were lost, damaged, or not conforming to purchase requirements) is the responsibility of the contracting officer. This is an essential part of the overall contract closeout process, even for simplified acquisitions. Assistance may also be requested from financial customer liaisons and other Financial Operations (J-8) personnel (who track down missing receipts), and from DFAS, as required.

(D) Verification is to be performed on a periodic basis, but no less frequently than semi-annually. Each supply chain shall inform J-73 of the verification cycle it has selected for itself, and when such verifications will begin. Verifications shall commence no later than January 2, 2008. Every fast-pay payment for transactions valued at $100,000 or less that has been made since the last verification period shall have an equal opportunity of being included in the random sample for reconciliation. That is, if verification is performed semiannually, all such fast-pay payments made over the preceding six-month period shall be included in the pool from which the sample is selected for verification. If a quarterly or monthly verification period is selected, all transactions occurring over the last three months, or over the preceding month, respectively, will comprise the universe from which the random sample is drawn. To the extent that fast pay is featured in automated, as well as manual, transactions, both automated and manual transactions will be included in the universe from which the random sample is selected. As stated in 13.402(f)(1)(91)(B) of this section, all transactions valued at greater than $100,000 shall be individually reconciled; they shall not be included in the universe for random sampling purposes. Note that the pool from which transactions will be selected for verification is not limited to those on which non-receipts and nonconformances have previously been brought to the contractor’s attention for resolution, or which are otherwise problematic (e.g., orders for which the customer never sent in a receipt acknowledgement). In other words, sampling is not to be performed on a “management by exception” basis. On the other hand, consideration should be given to increasing the sample size or performing a 100% review for suppliers/customers with a problematic record.

(E) Until a standardized sampling plan that satisfies the requirements for randomness, confidence, and statistical validity, and that will provide for sampling on an automated or manual basis, is produced and disseminated by Financial Operations (J-8) (estimated completion date December 07), contracting personnel are to select, on a random basis, no less than 10 percent of the universe of fast-pay transactions valued at $100,000 or below occurring since the previous validation effort for submittal to the reconciliation process.

(i) Paragraph 13.402(f)(1)(91)(D) of this section states that all transactions valued below $100,000 have an equal opportunity to be selected for reconciliation (that is, are weighted equally in the verification process). However, if an activity already has a sampling plan in place that assigns greater weight to transactions over $30,000 than to those below that dollar amount, the activity may continue to use its own sampling plan until a standardized Enterprise-wide plan is available. The activity’s intention to do so, though, along with details of how the plan was devised, shall be provided to J-71 as a condition of continued use. The notice shall be provided no later than 30 days from the effective date of this coverage; J-71 will forward a copy to J-8 for their information. Absent this notification, all contracting activities will be expected to sample at least 10 percent of all transactions valued from $1 to $100,000. (Although the weights assigned to transactions according to dollar value may vary somewhat, any existing sampling plan submitted to J-71 must nevertheless include transactions valued below, as well as above, $30,000, in order to be considered acceptable.)

(ii) Once a standardized sampling plan is in place, contracting personnel will utilize the EBS Job Aid, “Using the MRA [Material Receipt Acknowledgment] Comparison Report for Goods Receipt Reconciliation,” and associated business rules, to assist in the verification process for automated transactions. The sampling plan, job aid, and business rules, taken together, constitute the internal control procedures for use of fast pay. Eventually, wide-area work-flow (WAWF) functionality and the “Transporter Proof of Delivery” clause will also be part of this internal-control structure.

(F) Reconciliation results are to be reported by each supply chain to J-7 (attention: J-73) for inclusion in the “Acquisition Integrity Dashboard.” If the reconciliation exposes discrepancies (including, but not limited to, unmatched disbursements, overages, underages, or uncorrected goods nonconformances) between the actual customer receipts and either vendor invoices or receipts generated by the system, or both, in more than 5 percent of the sample, an additional sample, of the same size as the original group subjected to reconciliation, and excluding the transactions previously sampled, shall undergo the verification process. If more than 5 percent of this second sample is also discrepant, J-7 may require verification of additional or all transactions. If verification of additional transactions (as required) reveals a discrepancy rate that is, consistently, at 5 percent or greater, the use of fast pay may be suspended for all new acquisitions at that activity for a specific period of time (e.g., for a duration equal to two verification periods), with exceptions only granted by the Senior Procurement Executive on a case-by-case basis.