Staff shortages linked to Defense audit agency problems

The Defense Contract Audit Agency is understaffed and employees often are pressed to deliver audit findings to Pentagon contracting officers prematurely, department officials told members of the House Armed Services Defense Acquisition Reform Panel on Thursday.

The result, a government watchdog testified, is that some reports are whitewashed or rubber-stamped. In other cases, auditors waste time on low-risk and low-value contracts, said Gregory Kutz, managing director of forensic audits and special investigations at the Government Accountability Office.

"There is a clear disparity between resources and requirements," he testified.

GAO has released two reports in the past 15 months on widespread problems with audit quality at DCAA. The original July 2008 report focused on a handful of California branch offices while the most recent report, issued last month, focused on agencywide challenges.

In fiscal 2009, DCAA's 3,600 auditors performed nearly 22,000 audits covering $330 billion in proposed or claimed contractor costs. To put those figures in perspective, to keep that annual pace the agency would have to issue more than 60 audit reports daily, including weekends and holidays.

Defense Department officials agreed DCAA auditors must tread a delicate balance between delivering informative pre- and post-award contractor audits that procurement officials need to ensure taxpayers are receiving best value for their money, and following the strict government auditing standards.

"I agree that the [DCAA] environment is one that stresses timeliness," said Shay Assad, the Pentagon's director of defense procurement and acquisition policy.

DCAA Director April Stephenson noted, however, that the nearly 22,000 audits her agency conducted last fiscal year were not all created equal. Some, such as the multibillion LOGCAP services contract for logistics work in Kuwait, Afghanistan and Iraq, required high levels of staffing and resources. Other contracts, she said, were relatively simple and accounted for a few million dollars.

And, while Stephenson acknowledged additional staff would be helpful, she noted that DCAA has a lighter workload than in recent years. At its peak, the agency conducted 35,000 to 40,000 audits annually, she said. It now takes on fewer assignments and going forward will focus predominantly on high-risk contracts.

Regardless, DCAA was approved to hire 300 auditor trainees in fiscal 2009 and 200 more in fiscal 2010. The agency also has tentative approval for 200 hires fiscal 2011, depending on budget priorities, Stephenson said.

"Based on our discussions with contracting officers, contractors and auditors, some and possibly most of the reductions in audit scope and responsiveness by DCAA is a direct result of the staffing drawdown while workload increased," Assad said. "Until, staffing issues are resolved, it will not be possible for DCAA to perform at the level of quality and efficiency that is desired."

But, some lawmakers questioned whether additional staff would solve all that ails DCAA.

"I wonder if 700 new people is helpful or will create new problems," said Rep. Jim Cooper, D-Tenn. "What we want is new solutions, not just hiring new people."

Stephenson noted that the increased staffing is just one piece of the solution and the agency has initiated more than 50 internal reforms to its structure, culture and processes in response to GAO's findings.