Procurement oversight: A case of friendly fire?

There's an old saying that if you're holding a hammer, everything looks like a nail. Does that mean that if you're an auditor every relationship looks like fraud, waste or abuse?

This came to mind while watching a Feb. 1 hearing on improving federal contract auditing by the Ad Hoc Subcommittee on Contracting Oversight. As described on its website, "the hearing examined how federal agencies use contract audits to detect and prevent waste, fraud, and abuse in government contracts. In particular, the hearing reviewed the findings of the subcommittee’s ongoing investigation of the type and number of contract audits at federal agencies. The hearing also examined the role played by the Defense Contract Audit Agency (DCAA) in performing contract audits for agencies other than the Defense Department."

Not being an expert in federal contract auditing, I found the hearing very informational. I learned that Sen. Claire McCaskill (D-Mo.), who oversaw the hearing, is a former state auditor. I also learned that former state auditors do not think highly of contracting officials. Why do I think that? Maybe because McCaskill said "contracting officers lose objectivity because they get too friendly with the contractors they oversee and build connections with the companies as business partners, and therefore lighten up on tough independent supervision." Maybe because she also said, "Auditors don’t have that relationship, which makes them stick to their impartiality in ways the contracting officer could not."

Why the need for this fed-on-fed attack? I'm not sure, but I think being an auditor means you have to have a thick skin, developed from years of not being treated well on your job. As McCaskill put it, "The biggest lie ever told to me as a state auditor was 'Gosh, we're glad to see you.'"

As a former auditor, the senator admitted some bias. In questioning representatives from the departments of Education, Energy and Defense, the General Services Administration, the Government Accountability Office, the Project of Government Oversight and a lawyer speaking on behalf of the U.S. Chamber of Commerce, she made it clear that contracting officers were not allowed at the adults' table. As she put it, "Contracting officers should stick to auditors’ conclusions on contract pricing to keep the officers' perhaps impaired judgment out of the negotiations."

It's not as if auditors don't have any problems. As pointed out in the hearing, federal auditors have their own issues: They are understaffed, undertrained and overworked. Anecdotes were shared of agencies hiring higher-priced, private-sector firms in order to get audits done in a more timely fashion.

I am not belittling McCaskill's impressive work in searching for waste, fraud and abuse – it is a large task. A recent GAO report estimates $125 billion in improper payments – that is, payments that should not have been made or were made in the incorrect amount – governmentwide. (As another old saying goes, you save a billion here and a billion there, and pretty soon you're talking about real money.)

But I'm not sure her pitting one agency against another is the most productive solution. As participants in the hearing and several commenters have pointed out, the procurement process requires participation from multiple participants, who all make their decisions with feedback from each other. It seems to me that the best way to solve the problem is not to shut down one of the central players based on personal generalities. Instead, it is to bring more transparency to the process and improve training or oversight.