Program pays off (without interest)

GCN Agency Award | Tool automates paper invoicing system, resulting in fewer late payments and big savings for taxpayers

Project at a glance

WHO: The Interior Department's GovWorks Federal Acquisition Center

MISSION: To automate invoicing and payments for GovWorks' federal customers

WHAT WAS: A laborious paper-based manual system that was breaking down as bills and invoices piled up. Because the process involved a lot of paper and a lot of people, both from GovWorks and agency customers, late payments increased, resulting in approximately $200,000 to $300,000 in interest payments each quarter.

WHAT IS: GovPay, an automated, online invoicing system that notifies GovWorks contracting officials when payment is due for a certain contract. A GovWorks official contacts the customer agency to determine whether the work has been performed and, if so, approves payment. Vendors are paid electronically via a
secure channel with the Treasury.

USERS: GovWorks has nearly 900 civilian and Defense customers that have contracts with more than 1,000 vendors.

IMPACT: Since its inception in fiscal 2005, the GovPay system has reduced late payments from 7 percent of GovWorks' total to virtually zero, saving the government hundreds of thousands of dollars each year. For GovWorks, the system has let the Franchise Fund realign its staff and focus more specifically on contract oversight.

COST: $1.5 million

Our purpose was really to protect jobs, offer services to others, and to see if we couldn't find a way to change the way government operates.' David Sutfin, GovWorks assistant director

Rick Steele

MISSION FOCUS: GovPay allows the GovWorks team members, which include (from left to right) Dick Bollick, Rich Stegal, Sally Silberman, David Sutfin, Dan McCarthy, Katherine Valltos and Bill Archambeault, to emphasize their mission of contract management, not just contract payment.

Rick Steele

When work started backing up at the Interior Department's GovWorks Federal Acquisition Center, project leaders felt the time was right to get on the e-government bandwagon.

The result was GovPay, a program that has hit all the e-government marks promoted by the Office of Management and Budget, reducing costs, improving performance and'most important'letting agency workers focus on their mission.

'The ability to use the Internet really adds value for the federal government,' said David Sutfin, assistant director for GovWorks. 'That is what GovPay is all about.'

GovPay essentially revolutionized the way GovWorks does its business. As the Interior Department's Franchise Fund, GovWorks services 870 civilian and defense clients, and more than 1,100 vendors.

From its inception, GovWorks relied on a paper-based invoice system for bill-paying. Vendors would submit invoices to GovWorks, which would turn them over to appropriate contracting officials, who would recommend payment.

As workloads increased, the paper system began breaking down. Interest payments piled up, and GovWorks was late in paying bills.

Sutfin estimated that GovWorks, a small shop to begin with, was using 32 employees'some federal, some contractors'just to do invoicing. On top of that, its agency customers in the United States and abroad had their own contracting officials who needed to be involved in the process, he said.

With such a large number of people searching through invoices and verifying contract performance, 'you can imagine why many payments were being lost in the shuffle,' he said.

In fact, GovWorks' payments to vendors were late 7 percent of the time, Sutfin said, which cost the government and, ultimately, the taxpayers, between $200,000 and $300,000 a year in interest payments.

It is no wonder, then, that the GovWorks team began looking for alternatives. 'It was just taking too long to process those invoices on a paper-based system,' Sutfin said. 'It dawned on us,' he added, somewhat facetiously, 'that the Internet was out there.'

Looking to harness the Web's power and reach, GovWorks in 2004 hired Concurrent Technologies Corp. of Johnstown, Pa., to develop the GovPay system, which would automate the lumbering manual-payment process.

GovPay, brought online in fiscal 2005, is a Web application written in Java 1.4 and running with Microsoft SQL server, said Kamal Gella, CTC's principal technical manager and GovPay program manager.

The system was built based on an enterprise architecture framework and has several reusable components, Gella said. It generally runs in a Microsoft Windows environment, but Gella said the application can run on any operating system.
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The system interfaces with two key software packages to manage contract
information'the Advanced Budget/Accounting Control and Information
System (ABACIS) and the Business Information System. By feeding into ABACIS'an accounting program that processes Interior's spending on contracts, travel, and payments to other federal agencies'the GovPay data is available and accessible to more people.

Paying up

Invoices are sent electronically to GovWorks' contracting officers, who then verify with contracting officers at customer agencies that the payments are justified'for instance, that services were performed. If payments are approved, vendors are notified and paid electronically via a link to the Treasury.

Since November 2004, GovPay has processed about 30,000 invoices totaling $2.5 billion, CTC officials said. The system now processes about 2,000 invoices a month, GovWorks and CTC officials said. GovPay also helped Interior meet its goal of processing 98 percent of its invoices within 30 days.

Most important, the system has virtually eliminated late payments, Sutfin said. This has dramatically reduced the interest GovWorks customers pay, saving taxpayers over $300,000 a year, he said.

'You could basically say we have no late payments,' he said. 'GovPay is working beyond our expectations.'

Also, GovPay let the GovWorks team focus on its mission of contract management, rather than just contract payment. By automating the invoicing system, GovWorks moved 10 employees to other tasks, and Sutfin said he was able to reduce the number of contractors needed to process the invoices manually.

'We were able to reduce [the invoicing] staff considerably,' he said.

And paying the vendors on time has given the government a stronger hand in contract negotiations, Sutfin said. Some vendors anticipate interest payments as part of their pricing structure, and by virtually eliminating late payments, Sutfin said, contractors are more likely to offer lower prices.

Also, small businesses that may have been leery of dealing with the government because of late payments can now be assured that they will be paid on time, he said.

'The vendors are attuned to the fact that they are going to be paid,' Sutfin said. 'Cash flow is very important to industry, especially small businesses. This is an invaluable tool for small businesses.'

Josette Oder, vice president of client services at LeapFrog Solutions, Inc. of Fairfax, Va., a company that receives its payments through GovPay, said the system has made life easier for vendors as well.

'The ease of use of this system has just be a real saving grace for us,' she said. 'There is never a question of where we are in the billing process. ... From an industry perspective, it has made management of our contracts extremely easy.'

And if e-government is all about eliminating redundancies, freeing up agency resources and saving money, then GovPay fills the bill.

'Our purpose was really to protect jobs, offer services to others and see if we couldn't find a way to change the way government operates,' Sutfin said.

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