Panel Probes Pentagon’s Office in L.A.

An investigative panel of the House Armed Services Committee has begun a probe into administrative problems at the Pentagon’s main business office in Southern California, which has been late in paying its bills to thousands of defense contractors.

A House staff member investigating the agency, known as the Defense Contract Administration Service, said the subcommittee on investigations is collecting information from small- and medium-sized defense contractors about their problems with late payments.

The Defense Contract Administration Service, a federal agency responsible for paying out about $50 billion annually, has experienced a virtual administrative crisis at its Los Angeles office, which is responsible for paying defense contractors in the West.

Brig. Gen. John Serur, commander of the regional office, said in an interview several weeks ago that the extent of the late payments has been substantially reduced since December. Delinquent invoices were cut from 12,000 in December to 3,330 at the end of March, he said.

But many defense contractors contacted by The Times say they have not seen any improvement, and that some bills remain unpaid for months. The complaints have been growing for more than a year and have triggered protests by both the Aerospace Industries Assn. and the California Assn. of Certified Public Accountants.

Serur said the longstanding problems with delinquent payments should be solved for good by a new defense finance center in Columbus, Ohio, which will take responsibility from the regional centers and will pay all defense contractors across the nation. The center is scheduled to begin operations next month.

Only last week, Serur mailed letters to the chief executives of defense contractors in the West, acknowledging that DCAS “has been experiencing difficulty in meeting its payment obligations in a timely manner.” In one of the letters, which a contractor provided to The Times, Serur offered to meet to “discuss the current payment situation” and to preview operations in Columbus.

“It is certainly heartwarming to know the general is concerned about our payment problems after all this time,” one defense firm’s chief executive said.

Despite DCAS reassurances that the problems are being solved, members of the Armed Services Committee’s staff remain unconvinced.

“We are doing an investigation,” a subcommittee staff member said. “We think it is an important area.

“Our concern is that when they start the move from Los Angeles to Columbus this summer, things could get much worse,” he added. “That’s what we are hearing from some contractors.”