Commission on Wartime Contracting's Two-Front War: DoD and Contractors

The Commission on Wartime Contracting (CWC) released a “Special Report on Contractor Business Systems” yesterday highlighting deficiencies in the Defense Department’s oversight of contractor business systems. According to the report, waste, fraud, and abuse can be prevented by requiring contractors to improve estimating, billing, purchasing, labor, and compensation systems. The report states:

Effective oversight of contractor business systems and internal controls is important and needs immediate attention. Every dollar wasted is a dollar not available for training, equipment maintenance, life-support services, and ultimately for accomplishing the mission. The Congress and taxpayers have a large stake in this issue, but our military, civilians, and contractor employees on the front line are the ones who most acutely feel the impact of contract waste, fraud, and abuse. This fiscal hemorrhaging must stop.

Right now, taxpayers are vulnerable: the government can’t effectively audit those systems and detect contractor errors, omissions, misstatements, and unsupported, unallowable or unreasonable costs. As stated in the report, the CWC found in an August hearing that "unreliable data from business systems produced billions of dollars in contingency-contract costs that government auditors often could not verify."

The CWC places some of the blame on the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) for sending mixed messages to contractors. The report also points out that a lack of personnel in both agencies inhibits the government from conducting the necessary oversight.

It might be time to retire the “pay now, and ask questions later” theory of federal contract spending.

-- Scott Amey

Comments

[Posted on: Sep 23, 2009 at 05:42 PM]

Another problem which is often ignored, is that DCMA cannot take strong action against a contractor without the PCO/Buying Command agreeing, and normally they do not agree. I worked one program a couple years ago in which DCMA wanted to issue a stop-work order, but the PCO and program office where I worked refused to concur.

[Posted on: Sep 23, 2009 at 03:22 PM]

Prompt Payment info:
http://www.fms.treas.gov/prompt/index.html

[Posted on: Sep 23, 2009 at 09:03 AM]

Does the Prompt Payment Act, requiring that payments be issued or interest be paid on late payments, apply to payments to contractors?

[Posted on: Sep 22, 2009 at 05:42 PM]

Yeah, the problem is that there is a lack of oversight. It's clearly not that they pay contractors more to fail, screw up, and drag out contracts. It's that we don't have enough oversight. Hmm, maybe if they didn't pay contractors more to fail they wouldn't need more oversight? Do you think that might work? Nah. Clearly what we need is more oversight. That way the government can justify hiring more people which means more taxes but ultimately gives them more power. We all know that the government having more power is always the answer they like to hear, so there you go. We need more oversight.