DCAA Being Scapegoated?

One informed POGO blog reader posted this in response to the flurry around a GAO report on several DCAA audits:

The GAO report is really quite thin on substance. One great example that everyone seems to be making “hay” about is the allegation that a contractor had disapproved the scope of a DCAA audit and the auditor was forced to comply with the contractor’s wishes. That’s not what happened, and GAO’s report is disingenuous in this regard. DCAA, against its own wishes was forced by OSD, DCMA, and the Air Force, to put together a so-called Integrated Product Team (IPT), which included the contractor, for the purpose of conducting audits on the contractor. This policy was the brainchild of Jacques Gansler, the Clinton-era Under Secretary of Defense for Acquisition, and his Deputy, Stan Soloway, now President of the contractor lobbying group, the Professional Services Council. The IPT agreement spelled out the scope of the audit in advance, and when DCAA started the audit, the contractor disagreed with the what DCAA was doing, arguing that it violated the IPT agreement. OSD, DCMA and the Air Force concurred with the contractor, so DCAA was forced to limit the audit scope to what was in the IPT agreement. The contractor did not force the change in audit scope, the members of the IPT did, and DCAA was a very reluctant “partner” in that IPT (in fact, DCAA stopped using IPTs).

Also, Collins and Lieberman have some nerve criticizing DCAA. Their support of “acquisition reform” and limiting government access to contractor cost or pricing data has done more to bilk the taxpayer than anything some DCAA auditors might or might not have done. It reminds me of the recent report by Jacques Gansler finding that the acquisition workforce at DOD had been downsized too much. And who would know better about this than Gansler, as he was the person most responsible for the acquisition workforce downsizing during the Clinton Administration. Talk about hypocrisy.

I'm NOT quite as willing to let DCAA off the hook (I forgot to include the word "not" in my original posting.).  But POGO readers should know this side of the story.

-- Nick Schwellenbach

Comments

[fedup]

DCAA management continuously covers up issues which is costing taxpayers millions. I know of a cost impact worth 5 - 7 million dollars that the supervisor covered up until the statue of limitation kicked in. I know of mischarging on government contracts that has yet to be address. Please do anything within your power do away with DCAA.

[lovejoy]

The next question is - Does DCAA give bonuses to their employees?
If they do, what is the criteria- performing X number of completed audits/reports each FY? This would would account for the reliance on metrics, etc.
Also, DCAA needs to have more authority - not just give opinions/recommendations tied to objective criteria. Exit briefings are a must though to give a overall picture of the audit.

[Mike]

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

[Me]

Mr. Schwellenbach where do you get your information - you do not work for the Agency!

[John]

The real finding in the GAO report is the totally inept DCAA management structure. A large HQ office in Virginia and five regional offices that are brimming with too many CPA's who are all looking at metrics and trying to manage by the faulty metrics. Get out in the field and see what's really going on!!!! Management is blind to the monster they have created. How many check lists and metrics can they make us have before they relize the leaders of DCAA have no vision or commons sense. New fresh blood is needed, change won't come from within.

[Nick]

I'm just one long run-on sentence today.

[Jeff Hamilton]

Slow Friday?
Danielle, did Stan Soloway actually take time out of his busy schedule to post not one, but two comments on your blog today? Surely he has better things to do. Either that or he hears POGO's footsteps coming after him. Maybe the Professional Services Council is trying to get hip by blogging on the poor non-profit site?

And I am amused that Connie refers to Victor Hughes as Victor, but calls Stan Soloway, Soloway. There's clearly something going on between CC and SS. I hope it's sexual.

And finally, what's with Nick's recent post on Airtech? It is only one sentence but there appears to be three or four thoughts there.

Hope you're off somewhere having a drink with one of those little umbrellas in them.
Jeff

[Connie the Contractor]

Victor is correct that it was an estimating systems audit. Victor is wrong (at least according to my source) that it was not an IPT. It was an IPT, and that’s one of the reasons that the DCAA auditor initially ignored the IPT -- because it was an IPT being used in an inappropriate situation. In fact, the work papers refer to “contractor agrees,” or something to that effect.

Stan Soloway’s comments are more interesting. On the one hand, he wants absolute “facts” about DCAA's reported transgressions, but then says that DCAA is but one member of an IPT, and isn’t always the member that is correct. That misses the point. A DCAA audit should never be a part of an IPT. That allows the contractor and other government personnel to at least partially influence the auditor. That’s what GAO discovered.

Soloway's claims about preserving the “acquisition work force” are patently false. While Duncan Hunter might have made matters even worse, a central theory around which “acquisition reform” was premised was that simplified, “common sense” procurement techniques would require fewer people to oversee them. Soloway ignores the National Performance Review’s (NPR’s) estimates of “savings” resulting from reducing “acquisition personnel.” Gansler and Soloway were ardent supporters of the NPR, but I guess in light of the recent procurement scandals they don’t want to be associated with “that part” of acquisition reform anymore.

Finally, Soloway closes his screed with the clarion call of “9/11 changed everything.” Wow, I thought that only Administration appointees used that line of reasoning. Oh, I forgot, Stan is an Administration appointee (Corporation for National and Community Service).

[Stan Soloway]

Thanks to Victor for setting the record straight---facts do matter and the “informed” reader was obviously terribly ill-informed. There are also other critical, factual errors that color the entire argument Nick Schwellenbach is trying to make. His “informed” reader accuses Jack Gansler and me of hypocrisy when decrying the decline in the acquisition workforce. In truth, we spent an inordinate amount of time literally begging Congress to not force us to arbitrarily cut the acquisition workforce. If it weren’t for the countervailing actions of the Senate Armed Services Committee, the unchecked assaults on the acquisition workforce by the House Armed Services Committee and Congressman Duncan Hunter, would literally have decimated that workforce. The workforce reductions that did take place evolved from the broader, overall DoD downsizing across the department in the aftermath of the Cold War and the fall of the Berlin Wall, as scores of bases were closed and a general agreement arose as to what the future strategic environment would entail and require. 9/11 changed all that. Dr. Gansler’s objective and cogent report on Army contracting concluded not that the initial workforce adjustments were wrong—they were right in the context of the times--but that the Army had not adjusted in the seven years since the attacks to this new and different strategic picture. Indeed, the same could be said of many agencies across government. Further, one cannot reasonably associate the reductions in the DCAA workforce to reductions in the acquisition workforce---DCAA, as those who understand the Department know, reports to the Comptroller, not the Under Secretary for AT&L. As such, Dr. Gansler had no role in DCAA’s manning plans or actions; those were entirely within the purview of the Comptroller.

Nick’s “informed” reader is also deeply concerned that while an auditor had one view, the entire rest of the IPT had another—most importantly, the government’s contracting officer and the Defense Contract Management Agency. With all due respect to the importance, and independence, of auditors, the fact that he or she disagreed with the government’s other two representatives to the IPT does not make the auditor right.
In the end, it is important to see the GAO report on DCAA for what it is: a troubling critique of internal DCAA management issues. It is a critique of importance that cannot be taken lightly and deserves fuller, and objective, exploration. But to try to expand it beyond the scope of what GAO looked at or found, is simply not appropriate.

[Nick]

Victor,
As I stated, the views above are not mine, but those of an informed reader. Also, I said I'm NOT letting DCAA off the hook. And you're right, there is a difference between systems audits (e.g. contractor estimating, billing accounting systems) versus pre- and post-award audits.

Nick

[Victor Hughes]

The audit cited by the GAO was a system (internal control) audit and not an IPT audit which is a propsal audit. These are two totally different audits which require different audit steps (i.e. DCAA independently reviews the contractor system in a system audit vs. DCAA works with the contractor in an IPT audit). Mr. Nick Schwellenbach needs to check factual data before criticizing the GAO and and he needs to understand DCAA audits before let them off the hook.

Victor Hughes