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: