DFAS (Defense Finance And Accounting Service)

What is DFAS (Defense Finance And Accounting Service)?

DFAS, the Defense Finance and Accounting Service, is the payment processing arm of the Department of Defense (DoD). They're essentially the DoD's accountants, responsible for disbursing funds to both internal personnel and external entities, including government contractors. For contractors, DFAS is the organization that actually cuts the check for invoices.

Definition

DFAS's primary function is to ensure accurate and timely payments to vendors, military personnel, and civilian employees. This involves a complex system of controls, audits, and processes designed to safeguard taxpayer dollars. DFAS adheres to stringent federal regulations and guidelines, including the Prompt Payment Act, which dictates timelines for processing invoices and making payments. Government contractors interact with DFAS primarily through invoice submission and payment inquiries. Understanding DFAS's requirements for invoice formatting, supporting documentation, and electronic funds transfer is critical for avoiding delays in payment. Furthermore, DFAS plays a crucial role in ensuring compliance with Cost Accounting Standards (CAS) and other financial regulations.

Key Points

• Invoice Compliance: Adhering to DFAS's specific invoice formatting and documentation requirements is crucial for timely payment processing.
• Prompt Payment Act: Familiarize yourself with the Prompt Payment Act, which sets deadlines for government agencies to pay contractors. DFAS strives to comply with these deadlines.
• Electronic Funds Transfer (EFT): DFAS primarily uses EFT for payments. Contractors must provide accurate banking information.
• Payment Inquiries: Know the proper channels for addressing payment issues or discrepancies. DFAS provides points of contact for payment-related inquiries.

Practical Examples

1. Invoice Submission: A contractor performing IT services for the Air Force must submit invoices electronically through the Wide Area WorkFlow (WAWF) system, ensuring the invoice number matches the contract line item number (CLIN) and includes detailed descriptions of the services rendered. Failure to do so can result in rejection and payment delays.
2. Payment Inquiry: A small business providing equipment maintenance to the Army hasn't received payment within the 30-day timeframe stipulated by the Prompt Payment Act. The contractor should first check the WAWF system for invoice status. If unresolved, contact the DFAS point of contact listed in the contract with the contract number and invoice details.
3. Cost Accounting Standards (CAS) Compliance: A contractor performing a cost-reimbursable contract must adhere to Cost Accounting Standards (CAS). DFAS performs audits, often through DCAA, to ensure compliance. Failing a CAS audit can result in disallowed costs and financial penalties.