DoD to Change Vendor Payment System--Will it Speed Payments?

The Defense Department plans to stop using commercial electronic data interchange (EDI) systems to process payments and instead will require contactors to use the Department’s Web-based Wide Area Workflow - Receipt and Acceptance system. The department said it anticipates that the use of Wide Area Workflow will fully automate its payment process, significantly improve the timeliness of payments and reduce interest charges on late payments.

In 2004, Defense had $206 billion in contract payments subject to the Prompt Payment Act, according to a May 2006 Government Accountability Office report. Out of a pool of some $24 billion in payments the GAO studied, Defense was late in paying an average of 10 percent or $2.4 billion, of the payments to large vendors, while late payments to small vendors ran about 14.5 percent or over $3.4 billion, according to the report.

Defense wrote in an Aug. 14 Federal Register notice that neither the American National Standards Institute X12 EDI nor the Web Invoicing System cannot process all Defense contract payment requests and cannot be made available to all government offices and organizations.

According to the Federal Register notice, the change in Defense Federal Acquisition Regulations requiring use of Wide Area Workflow will require about 1,000 small businesses to switch to the system – a relatively low number compared with the 20,000 small companies already using it. (Contracting officers can allow the use of other payment systems if they choose.)

Wide Area Work Flow is the only system that can process all payment types. According to a fact sheet from the Defense Business Transformation Agency, it uses a virtual folder that contains the three documents required to pay a contractor: the contract, the invoice and the receiving report. The Wide Are Workflow helps eliminate lots of paper documents, which also can be misplaced, and compresses the contract payment process from weeks to days or minutes, according to the fact sheet.

Defense said it will take comments on the proposed rule change until Oct. 15.

Since it takes only one hour to learn how to use Wide Area Workflow, according to the Federal Register notice, it seems the new change in rules can be a boon to small vendors, even though I have yet to encounter any computer program that can be mastered in an hour. (Original story by Bob Brewin)

Note: See WAWF training course available at http://wawftraining.com Source: Original story by Bob Brewin through the Association of Procurement Technical Assistance Centers at http://www.aptac-us.org/new/Contracting_News/index.php?articleID=83