Skip to Main Content
Project on Government Oversight




DCAA auditors need independence

April 4, 2010 


Printed in The Federal Times
April 4, 2010
By Danielle Brian and Mandy Smithberger

The Defense Contract Audit Agency has been under intense congressional scrutiny since a 2008 Government Accountability Office report found that auditors lacked independence. The report, based on hotline complaints from auditors, found that many of the agency's problems came down to human capital management, particularly the use of metrics that valued quantity over quality audits, and loyalty over independence.

In response, there has been a change in leadership at DCAA, and the Defense Department insists the agency is being overhauled to restore it to the strong, independent agency it once was. But if you listen to many auditors in the field, you hear another story.

The overwhelming message from the auditors who have approached the Project On Government Oversight (POGO) is that many of the reforms aren't actually designed to achieve meaningful change.

There has been a lot of criticism and outrage about inappropriately changing audit opinions, facilitating cozy relationships with contractors and creating an abusive work environment, but little to no action to hold bad managers and supervisors accountable. The continued presence of those managers and supervisors creates a chilling effect on any internal efforts for reform, and real change cannot occur until they are held accountable. This needs to be a focus for the new DCAA director.

One of the reforms DCAA headquarters points to is the formation of ad hoc groups to examine the agency's practices and suggest solutions. Only one of the groups was formed as a kind of grassroots group, however. That group was made up of agency auditors who wanted to examine DCAA's promotion practices to address a perception within the agency that auditors are promoted based on loyalty to management.

But when this reform group sought information that would allow its members to conduct compliance testing to see whether the perception was valid, DCAA headquarters denied the request. The group disbanded because it couldn't fulfill its mission. Headquarters formed a new group, but it is restricted from analyzing personnel data.

Taxpayers should question whether the resistance from DCAA headquarters is indicative of a systemic resistance by management against real improvements.

The execution of another reform also raises concerns. In response to allegations that DCAA had a hostile working environment, the agency created a hot line for auditors to report conflicts with management. But auditors tell POGO there are concerns about whether this hot line is effective, particularly since, as it stands now, the findings from any hotline investigation are reported to the manager of that region — likely the person who is at least indirectly responsible for any misconduct — presenting an obvious conflict of interest. Determining legitimacy of hotline concerns should be done by someone independent, such as the Defense Department inspector general.

Another change ostensibly meant to improve the agency was the Defense Department's removal of DCAA Director April Stephenson. This decision, however, was a political decision following Senate criticism, not a response to address the substance of concerns that the agency lacks the independence, resources and clout necessary to serve taxpayer interests. We are also concerned that Stephenson's removal occurred when contractors were complaining bitterly about reforms she tried to make to address GAO's findings.

We worry that DCAA auditors cannot operate independently within the Defense Department. DCAA's independence must be strengthened by authorizing the agency to fully audit contractors, including allowing timely access to data and fully funding DCAA's budget requests. DCAA personnel should not be placed in the untenable position of worrying they will lose their jobs when they pursue thorough audits.

But these problems are not unique to DCAA — auditors across the government have come to POGO saying they lack the resources and independence necessary to root out wasteful spending. To make the system truly effective, DCAA and other audit agencies should be made into an independent federal contract audit agency that could hold contractors accountable for waste, fraud and abuse.

In the meantime, Congress and the new DCAA director need to talk to the auditors in the field. Field auditors blew the whistle on these problems, and it would be foolish not to give the auditors the lead in resolving them.


Danielle Brian is the executive director and Mandy Smithberger is the national security investigator at the nonprofit, nonpartisan Project On Government Oversight.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

# # #