Defense Finance and Accounting Service


The Defense Finance and Accounting Service is an agency of the United States Department of Defense, headquartered in Indianapolis, IN. DFAS was established in 1991 under the authority, direction, and control of the Under Secretary of Defense /Chief Financial Officer to strengthen and reduce costs of financial management and operations within DOD. DFAS is responsible for all payments to servicemembers, employees, vendors, and contractors. It provides business intelligence and finance and accounting information to DOD decisionmakers. DFAS is also responsible for preparing annual financial statements and the consolidation, standardization, and modernization of finance and accounting requirements, functions, processes, operations, and systems for DOD.
One of the most visible responsibilities of DFAS is handling military pay. DFAS pays all DoD military and civilian personnel, retirees and annuitants, as well as major DoD contractors and vendors. DFAS also supports customers outside the DoD in support of electronic government initiatives. Customers include the Executive Office of the President, Department of Energy, Department of Veterans Affairs, Department of Health & Human Services, Department of State, U.S. Agency for Global Media and Foreign partners
DFAS is a working capital fund agency financed by reimbursement of operating costs from its governmental customers rather than through direct appropriations. DFAS remains the world's largest finance and accounting operation.
In FY 2019, DFAS:
Prior to 1990 each of the three military departments and the other major governmental agencies developed and implemented their own accounting, budgeting, and financial management systems. This freedom of operation lead to numerous specialized systems that were incapable of communicating with one another. In 1990, there were 878 independent finance and accounting systems maintained within Federal Government Agencies.
In 1991 Secretary of Defense Dick Cheney created the Defense Finance and Accounting Service to reduce the cost of Defense Department finance and accounting operations and to strengthen financial management through consolidation of finance and accounting activities across the department. Since its inception, DFAS has consolidated more than 300 installation-level finance and accounting offices into 10 sites, and reduced the work force from about 27,000 to about 13,000 personnel.
In 2003 DFAS was selected by the Office of Personnel Management to be one of four governmental entities to provide payroll services for the U.S. government. In 2004, Nielsen Norman Group named the Defense Finance and Accounting Service's portal among the 10 best government intranets in the world. Experts at the Nielsen reviewed hundreds of intranets before naming the top ten which shared traits like good usability and organization, performance metrics and incremental improvements.
The 2005 round of Base Realignment and Closure cuts required DFAS to be completely restructured. Many sites were integrated into major centers. Since its inception, the agency has consolidated more than 300 installation-level offices into nine DFAS sites and reduced the number of systems in use from 330 to 111. As a result of BRAC efforts begun in FY 2006, DFAS has closed 20 sites, realigned headquarters from Arlington to Indianapolis and established a liaison location in Alexandria, Virginia.

Establishing legislation

and laid the groundwork for the Secretary of Defense to establish a more streamlined federal financial management structure. In late 1990, under the guidelines of the , the establishment of DFAS was announced in the Federal Register. These guidelines were later codified in the Code of Federal Regulations in.

Related agencies

The United States Department of Defense is the parent agency of DFAS. and the are subordinate agencies of DFAS.

Major events in the history of the agency

DFAS must "establish and enforce requirements, principles, standards, systems, procedures, and practices necessary to comply with finance and accounting statutory and regulatory requirements applicable to the Department of Defense." The DFAS responsibilities and authorities are outlined in DoD 7000.14-R, "DoD Financial Management Regulation."

Locations