It’s been a rough week for the Defense Contract Audit Agency, home to the Pentagon beancounters charged with insuring the goverment doesn’t get robbed blind by military contractors. They are supposed to be doing that, at least. Recently, though, there have been questions about how effective the agency has been in protecting billions in taxpayer dollars from falling prey to waste, fraud, and abuse. On Tuesday, the Commission on Wartime Contracting—which has a former DCAA deputy director as its co-chair—blasted the problem-plagued DCAA, along the Defense Contract Management Agency, for failing to provide adequate oversight. Today, in tandem with a Senate hearing on the DCAA, the Government Accountability Office followed with a report [PDF] that found big time flaws with the agency’s audits and operations. How big? Well, let’s put it this way: Of the 69 audits and cost-related reviews the GAO looked at, it determined that every single one of them had problems— and the majority of them had “serious” ones. The GAO explains the heart of the issue:
A management environment and agency culture that focused on facilitating the award of contracts and an ineffective audit quality assurance structure are at the root of the agencywide audit failures we identified. DCAA’s focus on a production-oriented mission led DCAA management to establish policies, procedures, and training that emphasized performing a large quantity of audits to support contracting decisions and gave inadequate attention to performing quality audits. An ineffective quality assurance structure, whereby DCAA gave passing scores to deficient audits compounded this problem.
Flawed audits are just the half of it. An earlier GAO report [PDF], in July 2008, found abusive work environments at two DCAA field offices, including auditors who were threatened with disciplinary action if they refused to change audit findings or draft favorable reports. Today, the Pentagon’s Inspector General, Gordon Heddell, told [PDF] the Senate homeland security committee that an investigation by his office had centered on one senior DCAA official in particular, the deputy director responsible for the agency’s west coast operations. Heddell said his office concluded that she “improperly directed changes” to one audit that “could have allowed Boeing to recover $271 million in unallowable costs.”
In the past, committee member Claire McCaskill (D-Mo.)—a former auditor herself—has demanded changes at the DCAA, saying in 2008 that “somebody needs to be fired this.” The “the top of my head is about to pop off” she tweeted during today’s hearing, remarking on the “unbelievable” problems at the agency. “In the world of auditing,” she said later, “what has been committed here is a capital crime.”
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