Contractor Group Seeks Late Pentagon Payments

Times Staff Writer

A number of aerospace contractors, saying the Pentagon is delinquent in paying its bills, have organized a group within the California Society of Certified Public Accountants, which is scheduled to meet today.

The payment problems involve a Defense Department business office in El Segundo called the Defense Contract Administration Service. The office is in the middle of an administrative crisis that has prompted growing protests by the industry.

The CPA group includes representatives of several major contractors, banks and accounting firms, who are all attempting to speed up payments. About $10 billion annually is paid out of the office in El Segundo.

A second contractor group organized within the Aerospace Industries Assn. met with officials in Washington earlier this month to lodge protests about the DCAS office in Los Angeles.


Moving Office to Ohio

The contractors have alleged that the Pentagon is delinquent on millions of dollars in contract payments, which has driven some small shops into virtual insolvency and forced major firms to increase their bank borrowing. They claim that paper work is often lost or rejected by DCAS for trivial errors, forcing additional payment delays.

But DCAS officials have sharply disputed the allegations every time they surface. Officials of the agency say delinquent invoices have been reduced by 80% and that the long-term problem will be solved by moving the entire payment office to Columbus, Ohio.

However, it is the plan to move the payment office to Columbus that has prompted growing industry concern. The new office will be known as the Defense Finance Center.


By locating the office so far from Los Angles, the nation’s largest defense-contracting center, the industry is concerned that payment problems will be even more difficult to clear up.

The meeting of CPAs is scheduled this morning at the Los Angeles Stouffer Concourse Hotel, near Los Angeles International Airport.

Michael Wilson, acting administrator of the new Defense Finance Center, is expected to make an appearance before the group to explain how it will help the industry get paid more promptly.

May Hire Accountant

So far, however, many contractors are skeptical that a centralized government bureaucracy responsible for paying about $50 billion annually will be better than a local payment office.

At an Aerospace Industries Assn. meeting earlier this month, officials at the Defense Logistics Agency, the parent organization of DCAS, said they would consider hiring a Big Eight accounting firm to help solve the DCAS problem.

In addition, the association is expected to create another working group to explore solutions to the DCAS problems.