Originally published 04:45 a.m., October 5, 2009, updated 03:50 p.m.,
October 5, 2009
Pentagon auditor deemed serial failure
Shaun Waterman THE WASHINGTON TIMES
Some members of Congress are so disturbed by failures and malfeasance
described in a recent government report that they are considering
removing the agency that audits hundreds of billions of dollars in
Defense Department contracts from Pentagon supervision.
One legislator said he felt physically sickened by the report.
The lawmakers were reacting to findings by the Government
Accountability Office (GAO), the investigative arm of Congress, about
the Defense Contract Auditing Agency (DCAA).
The agency, which last year was responsible for ensuring that
taxpayers got good value for more than a half-trillion dollars in
defense contracts, revised audits to curry favor with contractors,
promoted a supervisor responsible for such revisions to a top position
and rushed through other audits out of fear that the work would be
outsourced if employees took too much time, the GAO said.
“Unbelievable problems at Def Contrctng Agncy [sic],” Sen. Claire
McCaskill, Missouri Democrat, wrote on her Twitter account just before
a recent hearing on the report. “Top of my head is about to pop off.”
“I read a summary of the GAO report last night and quite frankly got
sick,” said Sen. Tom Coburn, Oklahoma Republican, adding that he would
not use all his allotted time for questions because he was “a little
bit too upset to go where I really want to go.”
“Each and every audit that GAO reviewed for this report was out of
compliance with auditing standards,” said Sen. Joe Lieberman,
Connecticut independent and chairman of the Homeland Security and
Governmental Affairs Committee. The DCAA “has a unique role,” as a
steward of taxpayer dollars, and consequently “needs to have
independence. It needs to stand up to pressures from both agencies and
contractors,” he said. “Perhaps it’s time for us to consider
separating DCAA from the Department of Defense and … making it an
independent auditing agency.”
The flaws identified by the GAO “allow contractors to overbill the
government in some cases for millions of dollars,” said the committees
ranking Republican, Sen. Susan Collins of Maine.
Calling the DCAAs performance “completely unacceptable,” she noted
that when the agency failed, “the fallout can cascade throughout the
system and ultimately shortchange our troops in the field.”
Pentagon officials told the hearing that the GAO investigation
examined audits conducted years ago and that a series of remedial
measures already had been implemented, including a new oversight
committee of all the service comptrollers.
Robert Hale, the undersecretary of defense who serves as the
departments comptroller and chief financial officer, and the official
to whom the DCAA currently reports, said it might take time for the
reforms to show results and argued against any change in the agencys
Nonetheless, Ms. Collins declared her “frustration” – a sentiment
widely shared by lawmakers at the hearing.
In one case, DCAA officials had attempted an audit of a major U.S.
defense contractor doing reconstruction work in Iraq. The contractor
was not named in the report, but a person familiar with the
investigation told The Washington Times that it was Parsons Corp., a
Pasadena, Calif.-based engineering firm whose work in the past has
been criticized as shoddy.
The GAO report said the firm did almost $900 million of U.S.
government contracting in 2004, the year the audit started, a
quarter-billion dollars worth of it in Iraq.
Two years after the DCAA began a review, in 2006, Stuart Bowen,
special inspector general for Iraq reconstruction, pledged to
investigate all of the $1 billion worth of contracting Parsons had
done in Iraq, after evidence emerged about unfinished and substandard
work. Last year, he released a report charging that the firm had been
paid $142 million for canceled reconstruction projects.
The initial DCAA audit identified eight serious deficiencies in the
firms billing system. But after the contractor objected, a supervisor
ordered DCAA staff to delete some of the documents the audit had
generated and revise others, the GAO found. When the final audit was
published, five of the eight deficiencies had been removed altogether
and the other three downgraded to suggestions, meaning the firm got a
“clean” audit rating.
That supervisor was subsequently promoted to become the quality
assurance manager for the DCAAs Western region, serving as the last
line of quality control over thousands of audits every year –
including many that ended up being questioned by the GAO – a
circumstance Ms. Collins called “devastating” to morale at the agency.
Erin Kuhlman, Parsons vice president for corporate relations, said the
company would not comment on the findings.
The GAOs top forensic accountant, Gregory Kutz, told lawmakers that
his staff had found a “lack of independence” at the DCAA, which had a
“production-focused culture resulting in part from flawed metrics …
intended to show that they could do their work faster and cheaper than
public accounting firms,” partly because it feared its work might
otherwise be outsourced.
“Taking time to find and address issues was discouraged,” he added,
concluding that “thousands of good auditors [are] trapped in a broken
system” at the agency.
The GAO said that, in the short term, Congress could legislate to
provide the agency with the same budgetary and legal independence that
inspector generals have.
“This change could strengthen leadership, independence and
transparency,” Mr. Kutz said.
In the longer term, he said, lawmakers could consider elevating the
agency to a “component agency” of the Department of Defense, reporting
directly to the Pentagons powerful deputy secretary; or even moving it
outside the department altogether, creating an independent audit
Mr. Hale, the Pentagon comptroller, told the hearing that the
administration opposed any such move.
Instead, he said, officials were working to strengthen the agencys
independence within the department, boosting resources and improving
oversight by establishing a special committee of defense auditors to
look at the agency’s work.
DCAA Director April Stephenson told lawmakers that the agency hoped to
hire 700 more people for training over the next three years and had
already “completely revamped” its quality assurance processes.
Mr. Hale pointed out that the audits reviewed by GAO and the inspector
general “were completed three to five years ago,” and that officials
had begun implementing corrective actions late last year, after the
problems were first identified by a DCAA whistleblower.
But he acknowledged that the effects of those reforms might not be visible.
“It took us years to get into this problem. It may take several years
for the full benefit of these actions to be realized,” Mr. Hale said.