By NICK SCHWELLENBACH
Consider the source: the latest government contractor industry survey conducted by Grant Thornton LLP, a contractor consulting firm, shouldn't be seen as the most independent and objective voice when it comes to contracting. Grant Thornton is clearly offering industry's perspective. But the strong words they have on the Defense Contract Audit Agency (DCAA)—long the bane of government contractors—and that of the Government Accountability Office (GAO), which issued two very critical reports on DCAA are worth noting.
Members of Congress and the GAO have praised the new leadership at DCAA for reforms that they say are intended to improve the quality of DCAA audits and the agency's independence. But the Grant Thornton report has a diametrically opposite view:
...in our view, the quality of the audit reports being issued by the DCAA under the new policies is far lower than was the case prior to the GAO reports. It appears that the net result from the GAO reports is that the DCAA’s production-oriented culture has been replaced by a system in which the DCAA takes far longer to issue lower quality reports to a contracting officer who must seek DCAA concurrence before conceding some of the DCAA’s positions in negotiations with the contractor. A possible remedy for the current inefficiencies that plague government contracting would be a statement of the basic principle that an audit report must be completed in a timely fashion if it’s going to be useful as part of an efficient and cost-effective procurement process.
Later in their report, Grant Thornton takes aim at what the GAO chose to examine:
It is unfortunate that the GAO did not focus its attention more closely on the way the DCAA allocates its resources rather than criticizing the DCAA for a perceived lack of independence or inadequate documentation in the work-paper files. Had the GAO focused on substance rather than form, their report could have had a positive impact on the procurement process. Instead, after implementing the GAO’s recommendations, the DCAA’s value to the procurement process seems to have been further diminished.
It's been well-established that DCAA is taking far longer to issue audit reports and that their coverage of contracts has plummeted even as their staff has significantly grown. But the justification has been that the fewer audits produced covering fewer contracts are of higher quality. Grant Thornton's report disputes that and claims that taxpayers are being served less effectively.
Is this a case of industry trying to mislead the public with misinformation? Or is there something to their claims? One thing is true: one measure of success should be whether DCAA is having a greater impact on the procurement process. If it is increasingly marginal and producing lower quality reports, how are taxpayers coming out better?
Perhaps GAO should do as Grant Thornton suggests and look at how DCAA spends its time and if there are better outcomes for taxpayers now than before the reforms took place. That would make a good deal of sense and would constitute important oversight of this extremely critical but largely unknown agency.
Nick Schwellenbach is POGO's director of investigations.Follow @schwellenbach