By Emelie Rutherford
A lawmaker on a key oversight panel is prodding the Pentagon’s audit contracting arm to be more expeditious in its work so defense companies don’t incur excessive costs.
During a hearing of the Senate Homeland Security and Government Affairs Committee’s Ad Hoc Contracting Oversight subcommittee, Subcommittee Ranking Member Scott Brown (R-Mass.) said defense firms in his state are losing “real money, real dollars” waiting for DCAA to complete cost-incurred audits conducted at the ends of defense contracts.
“They need closure,” Brown said on Tuesday.
Patrick Fitzgerald, the director of Defense Contract Auditing Agency (DCAA), acknowledged his office has a “significant backlog” such audits, which often are needed to close out contracts. He did not have a price figure regarding the backlog, but said it “quadrupled over the last 10 years.”
Fitzgerald pledged to “get after that backlog.” He said the DCAA is working to grow its workforce, hiring 500 new auditors over the past two years.
Brown, though, took issue with how the DCAA has hired so many new auditors and yet the backlog has grown.
“Some of these audits have gone on for years,” Brown said. “At what point do we say, my gosh,…something’s broken?”
Fitzgerald argued that the Pentagon procurement budget “exploded” over the past 10 years, as the wars in Afghanistan and Iraq have raged, and DCAA’s workload was flat during that period. Now, he said, the workforce is growing and continues to increase.
“We’re working…to both adjust to workload requirements and build the workforce capacity to get a good balance there so that we can effectively provide a quality product which is, in my opinion, a timely product,” he said.
Contracting Oversight subcommittee Chairwoman Claire McCaskill (D-Mo.), a former state auditor, argued that “this is one of those areas where we’ve got to be careful because there are areas of government where the investment that we make comes back.”
The Government Accountability Office (GAO) reported in 2009 on audit-quality problems at DCAA, including compromised auditor independence, insufficient audit testing, and inadequate planning and supervision. In response to the GAO’s findings, DCAA rescinded over 80 audit reports and has been making changes in its operations.
“We concluded that at the root of DCAA’s audit problems was DCAA’s focus on a production-oriented mission that emphasizes performing a large quantity of audits with inadequate attention to performing quality audits,” Jeanette Franzel, managing director of financial management and assurance, told the committee Tuesday.
The DCAA, she said, has heeded many of the recommendations in a 2009 GAO report intended to improve DCAA’s management environment, audit quality, and oversight. The GAO, though, recommended further DCAA reforms last year, including DCAA organizational changes.
Fitzgerald, for his part, also highlighted recent Pentagon auditing reforms, including creating an adjudication policy “that ensures that contract audit findings and recommendations receive timely and adequate consideration.”
He also talked of “creating a risk-based approach to ensure that the limited audit resources are focused on the areas with the greatest risk and largest payback to the taxpayer.”
McCakill expressed support for DCAA conducting more targeted audits.