Civilian agencies lag behind Defense on contract audits

The Defense Department conducted nearly 90 percent of all federal contract audits in fiscal 2009, and there appears to be little support for creating an audit unit to support civilian agencies, witnesses told a congressional panel on Wednesday.

The Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight requested information from 22 agencies about the number and type of contract audits conducted in fiscal 2009. The analysis also examined whether agency officials, contractors, or the Defense Contract Audit Agency performed the reviews.

The subcommittee found Defense conducted more than 15,000 contract audits that year, averaging one audit for every $24.7 million in procurement spending. The Pentagon, which accounted for 70 percent of total governmentwide contract spending in 2009, used DCAA for its audits.

Civilian agencies, meanwhile, conducted fewer than 1,900 audits in fiscal 2009, for an average of one audit per $511.4 million spent on contracts. Among the federal agencies conducting the fewest audits as a percentage of their total contract spending were the General Services Administration, and the Justice and State departments.

DCAA performed 76 percent of civilian contract audits. The remaining 24 percent of civilian federal contract audits were performed either by the agency's inspector general, or by contractors.

Some civilian agencies, such as the Health and Human Services Department, used DCAA for 90 percent of their contract audits, the subcommittee found. But, reliance on DCAA could start to decline because the agency has seen its backlog of contract audits grow in recent years -- a byproduct of reform efforts following a series of Government Accountability Office investigations.

DCAA's pileup has led several agencies to look to the private sector for support. In fiscal 2009 and fiscal 2010, the Energy Department used DCAA for a combined 649 audits at a cost of $19.2 million. Ingrid Kolb, director of Energy's Office of Management, said the department now pays $150 per hour for a private sector accounting firm to conduct some contract audits, compared to $114 per hour for DCAA. "But, DCAA is stretched thin, so we had to go to an independent auditor," Kolb said.

The Agriculture Department, meanwhile, spent more than $2.8 million in fiscal 2009 to acquire audit services from three contractors. In total, agencies hired private sector firms to perform 92 contract audits in fiscal 2009, according to subcommittee data.

The Education Department also has been forced to turn to contractors for audit support services. "The department faces challenges regarding contract audits in deciding whether they take priority over other demands for limited funds," said Thomas Skelly, the department's acting chief financial officer. "The department's [inspector general] has multiple priorities, and DCAA cannot always accommodate non-DoD requests for audit support." But Skelly conceded that obtaining audit support from a contractor can "be costly and time-consuming."

Several witness testified that DCAA has been understaffed, overworked and underresourced for more than a decade. During the past two years, the agency has hired 500 auditors; it will add 1,000 more by fiscal 2015. DCAA also is planning to shed several low-priority services and place more emphasis on high-risk contracts.

Another option for reforming the system could be the creation of a Federal Contract Audit Agency, which would provide support services governmentwide, or possibly just to civilian agencies. The idea has the support of the Project on Government Oversight, a watchdog group.

"An executive branch FCAA that covers the entire government would be somewhat like the Office of Special Counsel, a roving agency with a vast jurisdiction whose head would have to be presidentially appointed and Senate-confirmed," said Nick Schwellenbach, POGO's director of investigations.

But, the idea appeared to garner little support among subcommittee members and agency witnesses.

Subcommittee Chairwoman Sen. Claire McCaskill, D-Mo., said she was "beyond reluctant" to create another agency rather than improving the operations of DCAA so that it can become the "central repository" for federal contract auditors.

"As long as increased capacity is added at DCAA to serve our needs, we don't see a real benefit that would justify the cost of creating a new entity," Kolb said.

DCAA Director Patrick Fitzgerald agreed there is no real need for a new governmentwide audit agency.

"I believe that DCAA, as it is currently positioned in the Department of Defense, does have sufficient organizational independence to perform high-quality audits to accomplish its mission," Fitzgerald said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.