Summary: The Rocky Mountain Arsenal, located on 17,000 acres northeast of Denver, is one of the Defense Department's most contaminated installations. The military manufactured chemical weapons there for decades, and the Army leased part of the arsenal to the Shell Oil Company, which produced herbicides and pesticides. A cost-sharing arrangement between the Army and Shell does not provide for timely or efficient collection of what is expected to exceed $500 million in cleanup costs from Shell. When the government does not collect receivables in a timely manner, it loses the opportunity to invest these funds until needed. Since the 1989 settlement agreement with Shell, weak cash management practices have cost the government more than a million dollars. GAO noted three weaknesses in cash management practices at the arsenal. First, the Army bills Shell quarterly, rather than monthly, as is the usual business practice. Second, the payment cycle allows 90 days--rather than the 60 days called for in the settlement agreement--to document cost claims, prepare a quarterly statement, and pay the amount due. Third, the Army and Shell exchange payments through the mail rather than electronically, which further delays access to the funds. Nine of the 10 checks GAO reviewed, including one for $12 million, were deposited after the due date.
