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Defense auditors caught in crossfire

No one likes auditors. For years, companies have complained about intrusive GSA audits. When I was at CIT, state auditors would show up and sit in our conference room for weeks going over every piece of paper. It’s the nature of the activity that seems to create tension and distrust.

But the Defense Contract Audit Agency has risen to a new level of infamy. After two withering GAO reports on its performance, the director was reassigned to a different job in the Defense Department comptroller’s office. The Senate Homeland Security and Governmental Affairs Committee held a hearing and blasted the organization’s ability to ferret out waste, fraud and abuse.

Meanwhile, industry is complaining about the exact opposite. We have heard horror stories from companies about audits that go back years and measure seemingly insignificant details instead of performance and results. We have read the stories of no-bid contracts that lead to massive overcharges.

We know DCAA is understaffed and overworked. But the solution to this mismatch is not to focus on the details of the process but rather on the final product. If the agency is pleased with the result, that should be at least some indication of success.

Distrust of contractors is a particularly disturbing byproduct of those investigations. Everyone seems to forget that many of the employees at the contracting companies were once feds. They don’t leave the government and suddenly become crooks. Most contractors still believe in and work for the mission of the agency.

Audits will remain an important protection for the taxpayer, but it’s hard to see this environment improving when industry is screaming and passing the costs of these audits on to the customer, Congress is complaining that not enough crooks have been found, and DCAA remains understaffed.

Posted by Anne Armstrong on Nov 05, 2009 at 10:12 AM

Reader Comments

Wed, Nov 18, 2009 Washington, DC

Change should start from the contractor side. Past performance should be taken into account. Per earlier FCW article: Excerpts: Since 1995, the top 100 federal contractors have paid $26 billion in penalties related to violations and alleged violations, according to the watchdog group’s database. Those 100 companies received $257 billion in federal contracts in fiscal 2007, which is 14 percent more than the previous year and more than half the $457 billion in total federal contracts awarded that year, the Project on Government Oversight (POGO) said in a news release today.

Thu, Nov 12, 2009 Editor

Nice piece in Governing magazine on Washington State’s efforts to get beyond Gotcha audits and on to measuring performance. But apparently, nothing is easy.

Mon, Nov 9, 2009


Fri, Nov 6, 2009 SoCal Contractor So Cal

Alinea, Nice post. Industry wants high quality audits, and so do the buying commands. Industry wants timely audit reports where findings are based on well-understood facts, and so do the buying commands. Congress wants effective audits that find improper billings, and so do the buying commands. What's standing in the way of this nirvana is the DCAA's insistence on "standard" cookie-cutter audit programs, HQ-issued prohibitions on use of discretion by auditors and their supervisors, and the refusal by the audit agency to implement any sense of materiality with respect to what findings it does report. As things stand, the audit agency adds little if any value to the DOD acquisition process, and is actually one of the biggest impediments. Everybody wants that to change, and we are hoping Mr. Fitzgerald can lead the way.

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