Federal Times Link:  http://www.federaltimes.com/index.php?S=3718408



Senators consider reorganization at DCAA


September 11, 2008

The Defense Contract Audit Agency may have to divorce itself from its parent agency in order to regain and maintain the independence it needs to carry out its audits of more than $300 billion in government contracts effectively, members of the Senate Homeland Security and Governmental Affairs Committee said Sept. 10.

DCAA has come under fire following a July Government Accountability Office report that revealed that DCAA managers pressured field auditors to change audit results in favor of contractors.

Managers also ignored basic auditing standards to speed up work and meet rigid agency performance measures regarding audit time, cost and customer satisfaction, GAO found.

There needs to be an assessment of whether the agency is in the right place organizationally to prevent such challenges to its independence, said Gregory Kutz, managing director of forensic audits and special investigations with the GAO.

Committee chairman Joseph Lieberman, I-Conn., said he hoped the GAO would include an opinion on whether the agency should stop reporting to the Defense comptroller or the department in general as part of its follow-up audit of DCAA due out later this year.

Sen. Susan Collins, R-Maine, ranking member of the committee, also questioned whether DCAA’s location in DoD should be changed.

“I think a fundamental issue raised … is whether DCAA has sufficient insulation and independence within the Department of Defense,” she said.

“I think the root of this problem is the phony-baloney performance metric,” said Sen. Claire McCaskill, D-Mo., a former state auditor, who also asked if the agency should be moved.

DCAA’s annual performance report contained several pages explaining how well DCAA met its goals of keeping its customers — other Defense agencies — happy, but it had just one paragraph on how much money it saved the government, she said.

From its culture to its oversight role and performance metrics, DCAA “is fundamentally broken,” McCaskill said. “I don’t think the problem comes from people being dishonest or playing footsie with the contractors, it comes from the performance metrics in place.”

Whistleblowers, like Diem Thi Le, a DCAA auditor, agreed.

The agency has been caught up with making its customers happy with speedy, favorable audits, Le said. Le’s superiors retaliated against her for telling the Defense inspector general that her managers had changed unfavorable audit opinions without additional audit work in order to meet performance standards.

Auditors have gone along with such changes because they want to meet performance metrics that promote people who stick to budgeted hours and costs for audits and punish those who take extra time to find waste, fraud and abuse, she said. Under the performance measures, if she found a problem during an audit, “I wouldn’t want to explore the problem because I would run against the budgeted hours,” Le said.

Le believes the audit agency must separate from the Defense Department because it cannot act independently if it is reporting to the agency it is reviewing.

DCAA Director April Stephenson said she would support an evaluation of the agency’s place within the organization. Stephenson said she’s taking steps to rewrite the performance metrics to ensure managers aren’t inappropriately driving their field auditors to ignore important findings to meet budgets. The new metrics should be completed by the end of the month.

Tell us what you think. E-mail Elise Castelli.