There's a potential major defense scandal brewing. As reported by Government Executive's Robert Brodsky, the GAO released a report yesterday claiming that it "found a too-cozy relationship between management at the Defense Contract Audit Agency and some of the contractors they are assigned to audit. GAO also said auditors who complied with the investigation were subject to harassment and intimidation from their supervisors."
DCAA totally rejects the GAO report, saying in the Washington Post that there was "no evidence to support GAO's conclusions that 'DCAA managers took actions against their staff that hindered their investigations.' "
I don't know how accurate the GAO report is, but in reading it there is an awful lot of thick smoke being produced for there to be no fire, and the GAO only got involved because of numerous complaints to its fraud hotline.
If the GAO report turns out to be true, expect it to rapidly erode whatever little faith is left in defense acquisition by Congress and the public. Defense officials may claim that the acquisition process is not broken, just bent, but this could expose it as being shattered. If DCAA audits don't represent a program's "financial ground truth," it undermines the accuracy of a whole lot of reports to Congress. That would not make it very happy.
At the very least, expect calls from Congress for detailed, additional audits of defense contractors, as well as calls for the mandatory rotation of DCAA supervisors similar to what is being called for (but resisted) at the FAA when its inspectors were found to be too cozy with the airlines. As you may recall, FAA management also denied that there was a problem, until investigations of whistle blower complaints exposed the truth.
Congressional hearing will no doubt soon be scheduled to see whether there really is fire responsible for all that smoke.
COMMENTS
Major General Daryll Scott, DCMA commander would not let KBR be written up when KBR was delivering water in sewage trucks to the Green Zone. There were 15 individual Iraqi subcontractors and each only had 1 truck. The Scope of Work stated that the truck could deliver in that lone truck sewage or non-potable water that users took showers in at the trailer parks (man-camps). Sonoma County Health inspectors saw the photos and commented because the Army's Health inspection was nowhere to be found. Colonel John McQuain wanted that written evidence destroyed and covered up. He tried to relocate me from my position as Quality Assurance Representative and Captain David who replace me later found the same violations. I wrote KBR a Corrective Action Notice and after I left I mailed Colonel McQuain some water purification tablets and then filed an IG Complaint about the cover-up. MG Scott was fired from DCMA and Colonel McQuain did his best to protect KBR from getting written up. It is DCMAs responsibility to oversee the construction before KBR is signed off. The electrocutions that have happened in Iraq are DCMA commander's responsibility just as well as KBRs. QARs are not allowed to do their jobs because of Commanders interferring with the Quality Assurance Representative's job - so the check and balance is gone. These Commanders left their positions to go and work for KBR soon after, so the conflict of interest is there. Look at the lack of integrity at Camp Arifjan and the number of commanders and contracting officers that have been caught red-handed taking kickbacks and bribes. Major John Cockerham being the most famous at $ 20 million. Can they teach integrity in the U.S. Army or at DCMA or DCAA ?
Keven Barnes 11/25/09 12:35 pm ET
I second many of the comments, above. I fell afoul of DCAA Supervision more interested in window-dressing, than results. Their reports are needlessly complex and are driven by false metrics. Hell, a great majority of their legitimate findings are reversed by the contracting agency or senior-level politicians affiliated with the contractor, anyhow. What's the point? And it doesn't help that the agency is staffed by people with 20+ years seniority who routinely reject ideas brought in from the outside. Too bad, as the agency and it's mission are very necessary and the formal training provided (esp. the Memphis training institute) are first rate. What goes on at the individual FAOs is the crap-shoot.
John 11/01/09 07:12 pm ET
Talk about La La Land. The states license CPAs to certify financial statements. That has nothing to do with what DCAA does, which is largely cost accounting/auditing. Yet, they put this big emphasis on everyone being a CPA. Well, I'm a CPA and that work had nothing to do with being a CPA and certifying financial statements. Then, after wandering out of reality and into another dimension, they start unilaterally and artificially cutting the audit budgets to suit their overall budgets which results in not getting anything serious done for want of resources. The upper tier management lost all touch with reality and should be rotated to line duties with their salaries adjusted accordingly.
Gladly Gone 07/07/09 04:50 pm ET
DCAA may have a few problems but so does every single government agency. When is the last time GAO ever gave any agency a clean review... hmm... NEVER.
The problem with the findings is that GAO doesn't fully understand the type of auditing that DCAA does. It is completely different from the audit of government agencies, and GAO doesn't seem to understand this. Most of their findings are baseless and show a lack of understanding. Every single step of an audit performed by a DCAA auditor is documented, referenced, electronically archived, and physically filed.
Also, if DCAA doesn't document their findings and evidence adequately, it would be nice of the GAO to define "adequate." If they want adequate, they should spell out exactly what they want to see.
R 06/26/09 06:15 pm ET
Seems like many readers forget who has the real power in this equation. The contracting folks take our recommendations and do what they wish with them. They do not have to rotate but we do- kind of silly is it not? If rotating is such a good idea, why doesn't the agency head do so? Does GAGAS only operate at the bottom?
Of course the metric matra got us into trouble. The real question is whether we have the right leaders at the top to get us out of this mess.
BTW- I did not know being a CPA and a patriot were mutually exclusive.
old auditor 09/03/08 09:03 pm ET
Oh, and John Douglas (7/25/2008 comment), I would submit that should a DCAA supervisor or manager have actually said (as you put it) they will fire anyone who says there's no truth to the GAO report, they in fact should be fired. And I submit that it's in fact your duty -- if you're aware of someone who has made such a threat -- to step up and do something about it. After all, that person should be fired, right?
But I seriously doubt you will, because most likely your comment is just the basic slanderous, unsubstantiated, unverifiable -- and virtually anonymous -- statement that people throw out when there is a hint of chum in the water . . . .
KC 08/30/08 12:37 am ET
My my, after reading some of these comments it's apparent that there are a bunch of Agency employees with an axe to grind, or friendly government contractor employees who have no interest in DCAA continuing its mission.
Whatever problems there are we find them, fix them, and then move on. Understand that this Agency pays for itself multiple times over in terms of costs saved ($5-7 saved for every Agency budget dollar historically) on government contracts -- either that never made it to contracts in the first place, or were identified after having been charged and effectively returned. You want to see problems in government contracting, take away one of the only entities that provides a legitimate deterrent to the government contractor who is tempted to go a bit too far.
Is it a perfect organization? No. But find me one in government or even in the private sector that is.
And let's back off this wholesale indictment of April Stephenson -- the current DCAA director. Keep in mind that she has only been in the position less than one year. All of the issues that are cited in the GAO report were well before her time.
KC 08/30/08 12:27 am ET
April Stephenson has to accept the GAO findings for no other reason than they are true. DCAA is run by accountants who just don't see the "Big Picture." DCAA has a tough job but somewhere they went down the wrong road and the result is what we have today, a big mess. On the Government Executive Posts someone talked about management caring more about report Fonts than the actual work, this is very true. Why worry about the costs which could be a complex issues when you can worry about meaningless stuff. For the defenders of DCAA saying these are isolated incidents and a few trouble makers, I truely feel sorry for you. In many cases these people are blind to reality or have worked in one large residency for 35 years and do not see the insanity of doing the same thing over and over again or tracking the meaningless statistics. This story has exploded to such a level and in my opinion 15 years too late. April Stephenson is in over her head and in the end will lose because lots of outsiders are on to the DCAA house of cards now, it's not just DCAA employees who they can punish in their own little ways.
John 08/16/08 01:19 pm ET
DCAA is a great organization but definitely has some problems, and maybe even some serious problems at a few locations. Over the years DCAA seems to have lost focus on why the Agency exists. It's not PWT and gathering statistics and measuring every conceivable piece of data. (Our high-level managers need to MANAGE and stop acting like accountants) It's about keeping the thousands of govt contractors honest - basically doing those audits that have the highest chance of return. Supervisors deserve the chance to supervise a stable quality staff of auditors, and not be expected to do those never-ending nonsupervisory tasks, or give daily OJT to a continuous string of newhires. Same with Branch Managers. They need the time to understand and ask questions about the numerous reports they sign. Finally, if auditors are also given enough time to do their audits, it will all come together and DCAA will once again be one of the best agencies in the Govt. Most of the employees in DCAA are very hard-working, conscientious, and professional people. They pride themselves on saving billions of dollars on thousands of contracts. We'll survive this and probably be better off for it. The glass is half full.
steve 08/12/08 06:50 pm ET
Does anyone really believe the problem can be fixed by sending the dogs to the FAOs to kick a few heads in? Who designed the metrix and forced it down our throats?
scared 08/12/08 05:45 pm ET
Senior management is who lead us into this mess. Now the "fix" seems to be directed only at the lower levels of management. We did not design the matrix nor did we decide on our own to start IPTs and all that.
It seems like the same people who designed the system which they now believe broken are the ones who are now looking for fall guys.
Why don't we ask the people who tied metrix and "points of light" to awards and performance just what performance they wanted and how this differs. If you have metrix on sustention percentage, elapsed days and hours per assignment but nothing on CQ- what do you expect. The staff will work towards what YOU determined important.
BTW- if leaders are needed and we are the Defense Department, why are so few vets promoted?
scared 08/12/08 05:10 pm ET
I have watched Mr. Bill Reed (Retired) and Ms. April Stephenson transform DCAA into the largest CPA firm in the world. Today, CPAs fill most DCAA supervisor and management positions. Unfortunately, I am afraid DCAA has become another Arthur Andersen mentality. Instead of profits, greed, and deception, DCAA’s management is driven by statistics, metrics and silly report cards which results in the need to deceive. In my opinion,
DCAA supervisors and managers will do what it takes to achieve their statistics, metrics and report card grades no matter who it hurts in the process, even the defense of our country.
To correct DCAA management ills will take patriots, not CPAs! The changes needed in DCAA management policies and procedures will not come easy, if at all!
Mike
Mike 08/02/08 01:18 am ET
DCAA is dirty and needs to be corrected.
David 07/31/08 11:01 am ET
Bob. It's not a level of acceptability, but a proper perceptive of the results. i.e the results are not an indication of what is going on. From an statistical sampling stand point, the results would not be valid to project over a universe, and not "acceptable". Further, the "sample" was not randomly selected. My level of acceptability would be a valid sample of all work done at those offices. The sample should be capable of being projected over the universe. As an auditor, this kind of testing would be considered invalid. Even the audits referenced used better sampling techniques. Even April knows this. You're also assuming that what GAO says is fact. Whatever happen to the saying their are two sides to every story. Seems you are only looking at one side Bob. I have read the GAO report and her call for an IG review. Let the facts come out before you play judge and executioner. Thanks Bon
Brian 07/28/08 08:29 pm ET
Brian is correct – DCAA has a mandatory rotation policy. My mistake. However, again, if the GAO allegations are true, this rotation policy will undoubtedly be reviewed to see how effective it is in practice.
As far putting it all into perspective, please explain your level of acceptability. Just how many audits where intimidation of staff and the blocking of investigators through threats of disciplinary action and other punishments are acceptable to the DCAA?
Tell me too how that level of acceptability squares with DCAA director April Stephenson's statement that, "It is imperative that our agency is not only held to the highest professional standards, but also appears to be beyond reproach." (See her call for an IG review of the GAO allegations here: http://www.defenselink.mil/releases/release.aspx?releaseid=12097)
Seems that 13 out of 2800 isn't acceptable to her. Is it to you?
Bob Charette 07/27/08 08:55 pm ET
DCAA does have a mandatory rotation policy for supervisors and FAO mrg/Resident Auditors. Keep in mind we are talking about 13 auidts out of 2800 produced by these offices. This hardly a representative sample of the audits going on in the offices reported in the GAO report. Do a little homework you would know what I have written is true Robert
Brian 07/25/08 09:04 pm ET
I think that the cozy relationship is not just DCAA management perhaps is the DCAA customer who has relationship with the contractor. I saw many times that the DCAA customer does not want finding in the final report.
-- 07/25/08 01:13 pm ET
Does this surprise anyone? Upper management does this at many agencies, then blames others for the problems when they get caught. Pity the folks at this agency that reported the misconduct. Their lives and careers will be hell for years. Here is the way it will go now....my guess is that anonymous complaints will start to be filed against the staff that reported this misconduct, then management will have these "serious" complaints investigated against the staff that reported them, then the original whistleblowers (if that is what they were) will be tried by the management structure they reported for misconduct. Guess who wins in the end. Been there, done that.
frank 07/25/08 09:27 am ET
DCAA management says there's no truth to the allegations - and they will fire anyone who says otherwise. ;>)
John Douglas 07/25/08 09:02 am ET