Link to Government



Former employees say Defense audit agency is ‘broken’

Concern over meeting arbitrary deadlines and other job performance goals is at the heart of recently exposed management problems at the Defense Department’s lead contract oversight unit, nearly a dozen former employees told Government Executive in interviews and correspondence.

The ex-staffers at the Defense Contract Audit Agency, who, with one exception, requested anonymity, came from across the country and ranged in experience from just a few months to more than 30 years. Despite diverse career paths, they told similar stories in reaction to a Government Accountability Office report that DCAA supervisors improperly influenced audits, resulting in findings more favorable to a large federal contractor.

The former employees placed much of the blame on top-level managers — including recently retired DCAA director William Reed — for developing a culture beholden to job performance metrics rather than taxpayers.

They described an environment where supervisors got upset when auditors used the wrong font in their reports or made spelling errors, but appeared unconcerned that serious overbilling mistakes may have slipped through the cracks. And they recalled times when incomplete audits were pushed out the door by managers more concerned with meeting internal quotas and timetables than by the quality of their work.

“They don’t want findings. It makes waves and draws attention so they avoid those types of things so the higher ups don’t come down on them,” said one former auditor who spent nearly three years at DCAA’s Minneapolis branch. “The goal is not to save taxpayers money. People are really too afraid about what they will have to do to back up their findings so they try to avoid them altogether.”

Defense Department spokesman Chris Isleib declined to comment on the former employees’ criticisms. “DCAA is taking the GAO report very seriously,” he said, “and is taking every step necessary to review and address the issues cited in the report. DCAA is committed to supporting any review of its procedures and is prepared to take immediate action to fix any problems found.”

Metrics, Metrics and Metrics

While the former auditors said DCAA’s commitment to oversight has been on a steady decline since the 1980s, they generally did not believe corruption was at fault. None of the former employees could cite an example of agency supervisors taking any form of compensation from contractors for looking the other way about a critical audit.

Rather, they emphasized DCAA’s fixation with performance requirements and audit deadlines that they said are not tailored to the size or complexity of the project.

The problems, according to one 25-year veteran of the agency, can be traced back to the Defense Management Information System, a tool for tracking the status of ongoing audits.

The system assigns auditors specific responsibilities and provides them with a set amount of time — usually 30 days — to complete them. It also measures progress against a multitude of very detailed and specific metrics. Staff members at DCAA headquarters in Fort Belvoir, Va., track the output and compare results across regional offices.

“In my opinion, the end result was a massive bloated, soulless bureaucracy that totally lost touch with the taxpayer,” the 25-year-employee said, adding that the pressure to close out jobs and produce clean metrics — or green lights in the stoplight-style measurement system — was intense and often distracted from efforts to question contractor costs.

“In the end, defense contractors big and small are getting away with murder because they know we at DCAA are slaves to the metrics,” the former employee said.

Ivan Juric, a 20-year veteran of DCAA as both an auditor and program manager in the mid-Atlantic region, said the burdensome internal regulations prevent auditors from following their instincts. Audits, he said, are rarely dictated by documents or interviews, but rather by the established budget hours allowed to perform a review.

“There’s got to be a balance somewhere, but I think in DCAA headquarters’ strive to become a lean, mean audit machine, they swung the pendulum too far to the right,” Juric said. “And by doing that they kind of shot themselves in the foot.”

Pressure From Above

Last month’s GAO report also cited cases of intimidation. Supervisors in the California region threatened agency auditors with personnel action if they did not change reports to favor large contractors, GAO said. Unsupervised trainees allegedly were responsible for handling complex multimillion-dollar audits, leading to major mistakes. And, auditors who agreed to speak with GAO investigators reportedly were subject to harassment from managers.

Some of the former DCAA employees interviewed by Government Executive reported similar experiences.

The ex-staffer in Minneapolis said a branch manager once asked him to falsify a work paper because the supervisor was concerned that a report was late. Uncomfortable with the request, the former auditor appealed to another boss who instructed him “not to make waves with these people and to do what I was asked.” He eventually agreed to falsify the document.

The Minneapolis employee later quit, as did nearly half the new auditors he trained with at the Defense Contract Audit Institute.

Meanwhile, a retired DCAA supervisor with 30 years on the job said he was specifically told not to report fraud. “I was told that I could call the 800 hot line if I wanted,” the auditor explained. “However, I was reminded that GS-13 positions were coming open and that if I wanted to be promoted I should not report the fraud outside the agency. I did not call the hot line.”

An auditor who worked in the Maryland region for a brief time in 2005 said he was warned early on not to be overtly critical of contractors.

“My understanding was that when contractors complain about any particular auditor, bad things happen to that auditor,” said the former auditor, who now works for another federal agency. “When I was there I always had to keep in mind how I interacted with the contractor because if the contractor complained about me it would definitely get back to my supervisor. And there would be some sort of personnel actions or retaliation.”

Another former auditor with 25 years of experience in the Philadelphia region said supervisors forced him to change audits because of a fear that delays with a complicated audit could hurt the boss’ chances at a bonus.

Sometimes, the requests were more subtle. A former auditor with 17 years of experience in the Houston and Florida regions said supervisors would sit on critical reports for more than a year. Other times, managers would direct him to give contractors extra time before releasing an audit.

“They would say, ‘Give them an opportunity to support the findings, give them another chance to support it,'” said the 17-year auditor, who eventually quit the profession because of his experiences at DCAA. “It was a repetitive, ‘Don’t you think it’s getting better?’ type pressure. You almost get to the point where you feel you are not going to get anywhere … This agency is broken.”


·                       When I worked for DCAA (The Audit Agency) most of the auditors were hard working and conscientious. Our management did not lose sight of their goal, even in the face of ever increasing bureaucratic red tape. DCAA auditors were, and are, some of the brightest auditors working for the US of A.

·                       First off, having spent 11 years as DCAA CPA Senior Auditor, it is ironic that an internal control weakness finally brought down the “House of Cards that Bill Built”. What happened to the “Periodic Rotation of Employee Duties” to prevent / detect fraud, waste, and abuse in DCAA? Unfortunately, Bill Reed was above that internal control standard. I guess we are doomed to the repeat the past since we learned absolutely nothing from the scandalous J Edgar Hoovers (endless) reign at FBI. How can we prevent this problem from occurring in the future? First, since Bill Reed spent 25+ plus years as DCAA’s Director, we must acknowledge that the DCAA senior executives are thoroughly entrenched in the Bill Reed management paradigm. Furthermore, DoD needs to fully implement periodic rotation at the senior executive level to prevent this from occurring in the future. Periodic senior management rotation will prevent “metrics system gaming” provide increased accountability and ultimately taxpayer savings.

·                       It’s “circle the wagons” time, folks. Mediocrity and incompetance will continue to protect its own. I love the “August is audit quality month” stand-down day idea, where Regional and Deputy Regional Directors will lead discussions on audit quality. Aren’t these the guys who started and perpetuated this mess? If Ms Stephenson wants to give credibility to her efforts to reform DCAA, she had better start with an outside, completely independent group with no attachments to this scandal.