POGO has obtained a Defense Contract Audit Agency (DCAA) memo showing that the Pentagon has radically reduced oversight of tens of billions of contract dollars. From our press release today:
According to the memo, contracting guidance “now limits contracting officer requests for audit services to Fixed-price proposals over $10 million and Cost-Type proposals over $100 million, unless there are exceptional circumstances.”
These audit services are reviews of cost data (referred to as “reviews”) and they entail an examination of a contractor’s cost proposal to the government. In these proposals, contractors estimate how much it will cost them to accomplish work on a contract.
Previously, there was no dollar threshold for reviews on fixed-price contract proposals, but contracting officers would limit requests for DCAA reviews of proposals over a threshold tied to the submission of cost or pricing data, which is currently $700,000. The old threshold for reviews of cost-type proposals was $10 million, but could be lower if the contractor has systemic problems estimating costs.
As POGO Director of Investigations Nick Schwellenbach suggests in a statement today, this move could run counter to the Pentagon's cost savings goals:
“POGO has long feared contractors and their government allies would block DCAA from exposing contractor ripoffs,” said Nick Schwellenbach, POGO’s director of investigations. “Why are billions of dollars being put at risk when Secretary Gates is demanding cost savings?”
We'll have more on this memo next week, so stay tuned. For now, dive into the wonky details here—and be sure to let us know what you think in the comments section below.
-- Bryan Rahija