DCAA Under Fire Again

As a former Defense Contract Audit Agency (DCAA) auditor, I take interest in news stories and information coming out of that Agency.  The most recent news stories are beginning to hearken back to my days of being a new hire.  In the early 2000s, DCAA was on a hiring rampage of sorts.  I walked into an office that was inundated by GS-5, GS-7, and some new GS-9s.  The “young guns” were everywhere and the mentors at the office were doubled up or were sometimes assigned because they just happened to be there a little longer than those just coming in the door.  My mentor was the same grade level that I was but had started a full 6 months earlier!  You get the picture.

We were hired as part of a surge in auditors to get the backlog done.  We were running up against deadlines for making sure incurred cost audits were completed and we were immersed in the world of demand audits (those that have to be completed normally within 30-60 days to meet the deadlines of a Contracting Officer’s due diligence before making an award).

I am hearing that millions of dollars in defense contract costs could go unaudited because of a mounting backlog.  DCAA has a backlog of roughly $560 billion in incurred cost audits, but, according to DCAA, few audits in the current backlog are at risk of running up against the six-year limitation.  DCAA is prioritizing the oldest audits to reduce the chances of exceeding the limitation. I am also hearing that the number of audits performed by the DCAA has plummeted in recent years. Last year, the agency performed roughly a quarter the number of audits it did in 2008. 

I am also hearing a large “sigh” from contractors and Contracting Officers stuck in the traffic.  “DCAA just can’t get it together”  “DCAA delays these things way too much”  “They need to learn to prioritize.”  I have been on the inside and, like I said, keep up with some of the news since I left.  These are the same critics that just a few short years ago were calling out the agency for the completing too many audits ineffectively, failing to adequately oversee/supervise/manage the completion of the audits, and the conflicts of interest that may have been present.

DCAA finally makes a concerted effort (similar to the early 2000s when the backlog had to get trimmed) to get their appearance of impropriety and effectiveness to a manageable level, and again they are scrutinized.  They have focused on quality, not quantity this time around.  I admit, DCAA is not perfect, but they hold a place in my heart and I had to dig up some numbers to show they aren’t as abysmal as many would want to believe:

  • DCAA has hired hundreds of auditors and staff in the last few years (around 577) and plans to hire hundreds more.
  • The agency is sharing some of its contract review responsibilities with the Defense Contract Management Agency
  • DCAA is questioning more costs and producing greater net savings.
    • In 2003 (while I was still there and the agency was “quantity-first”), DCAA issued 29,780 audits (the highest number over 10 years) and questioned $8 billion in costs.  The net savings in that year was $2 billion.
    • In 2011, 7,390 audit reports were issued and $12 billion was questioned.  The net savings last year was $3.5 billion.

Although the agency would appear ineffective in the quantity of audit performed with the addition of over 550 auditors, clearly the “slowdown” has been beneficial to the taxpayer.  Contracting Officers and contract administrators, on the other hand, have not had the benefit of closeouts and contract completion over the same time period.

[Credit Given to Federal Time article here for some of the information.]

About Marty Herbert

With 13 years of government contract administration, analysis, finance, and audit experience, I have established a firm baseline in ethics and a specialization in government contracts that has prepared me to become a subject matter expert in my field. I am currently working on enhancing government contracts management and compliance through workflow tools and product offerings - attempting to make the process proactive as opposed to reactive.
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2 Responses to DCAA Under Fire Again

  1. Thank you for your insight, I began working with the DCAA in the 80’s and I believe this situation is unique to my experience. Using your own numbers (an average of 45 days an audit) your team finished 8.11 audits a year compared to the current 1.77. Add to this that most of the 1.77 audits are actually proposed rate audits which should only take hours of work and the questions simply pile up.

    I am hoping the work by professionals such as ourselves will provide a framework for contractors and DCAA to begin to provide the responsible accountabilty taxpayers deserve.

    • Stephen,
      I hadn’t even thought of it that way – in terms of hours spent per audit and how little was being done. I do still come back to, in my experience, it was “tick and tie let it fly” and we questioned very little in terms of cost when it came down to us cranking out numerous audits per year.

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