Pentagon's procrastination costs taxpayers $16 million Tiny error in computing retirees' pay goes uncorrected for nine years

August 20, 1993|By Richard H. P. Sia | Richard H. P. Sia,Washington Bureau

WASHINGTON -- For the Pentagon's practitioners of high finance, there's no such thing as a small mistake.

Consider what happened when managers at a defense finance and accounting center realized they had miscalculated the pay of 201,851 Air Force retirees for more than two years, giving them an extra dollar or two a month.

Let's reprogram the computer, they said.

That was in 1986.

It wasn't until last November -- nine years after the overpayments actually began -- that the managers got around to correcting the error.

The cost to taxpayers: $16 million.

"It's sort of a sad story of bureaucracy at its worst," says Robert J. Lieberman, the Pentagon's assistant inspector general for auditing, who first mentioned the problem publicly in Senate testimony last month. "The individual amounts [of overpayment] weren't enough to get people excited, so no one ever made this a priority."

Several employees, he adds, had another reason for inaction: They wanted to avoid answering calls and letters from retirees demanding to know why their pay was cut.

The Defense Finance and Accounting Service center in Denver, where the $16 million giveaway originated, won't try to recover the money because the retirees, some of whom may now be dead, didn't know they were being overpaid. It would also be too expensive, defense officials say.

an unpublicized April memo outlining the way financial managers at the Denver center let thousands of small -- technically illegal -- overpayments snowball into a $16 million gift to retirees, Mr. Lieberman concluded: "There were no acceptable reasons for delaying corrective action for nine years."

Indeed, with all the speed of its Denver office, the finance agency headquarters took two days to tell The Sun that it needed more time to develop answers to questions about the nine-year-old problem.

According to Mr. Lieberman, the problem began after a federal law took effect in 1983 requiring military retirement pay to be rounded down to the nearest dollar. Future cost-of-living increases were to be based on the rounded figure and then rounded down to the nearest dollar as well.

For thousands of lucky retirees, the Denver center used both dollars and cents to compute cost-of-living increases, although managers thought they were complying with the law by rounding the final figure in the benefit checks they issued. By the time the problem was corrected, some retirees were getting $6 more a month.

"They relied on someone to make a software change, but with bigger problems demanding attention, it got pushed back in the queue," Mr. Lieberman says. "The [Pentagon] comptroller and the Air Force should've both followed up to make sure the law was being followed."

The overpayment problem was actually rediscovered in late 1989 by a "quality assurance" worker who noticed that the retirement checks were too big. But it took two years to figure out what to do. Even then, a senior manager decided to wait until a cost-of-living increase kicked in at the end of 1992.

If laws were made to be broken, the finance center took care of at least one of them, Mr. Lieberman wrote in his memo. Even so, no one did it on purpose, he said.

"The current management says it won't happen again," Mr. Lieberman says before bursting into laughter. "They shouldn't make such rational promises."

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