Legal Definitions - DFAS

DFAS stands for the Defense Finance and Accounting Service.

DFAS is an agency within the U.S. Department of Defense responsible for managing all financial operations for military personnel, retirees, civilian employees, and contractors. This includes processing payments, maintaining financial records, and ensuring the accuracy and accountability of funds across the entire Department of Defense.

Here are some examples illustrating the role of DFAS:

• Example 1: A Service Member's Paycheck

  Imagine a U.S. Army soldier deployed overseas. Every two weeks, this soldier receives a direct deposit for their salary, including base pay, housing allowances, and any special duty pay. DFAS is the agency that calculates these complex entitlements, processes the payroll, and ensures the funds are accurately disbursed to the soldier's bank account. If the soldier has questions about their leave and earnings statement or needs to update their direct deposit information, they would interact with systems managed by DFAS.

• Example 2: A Military Retiree's Pension

  Consider a retired U.S. Navy officer who served for 25 years. Each month, this individual receives a pension payment as part of their retirement benefits. DFAS is responsible for calculating the correct amount of this pension, taking into account years of service, rank, and any cost-of-living adjustments. They then process and disburse these monthly payments, ensuring that the retired officer receives their entitled benefits consistently and accurately.

• Example 3: Payment to a Defense Contractor

  A private company has a contract with the U.S. Air Force to provide specialized aircraft maintenance services. Once the company completes a phase of work and submits an invoice, DFAS is the entity that reviews the invoice against the contract terms, verifies the services rendered, and processes the payment to the contractor. This ensures that government funds are properly accounted for and that contractors are paid accurately and on time for their services to the Department of Defense.