DCAA Internal Memos: Self-Assessment On Its Way

GovExec's Robert Brodsky has made two internal Defense Contract Audit Agency (DCAA) memos available that both show the increasingly scrutinized agency will be entering a period of self-assessment.

In an Aug. 7 memo (pdf), DCAA Director April Stephenson announced an internal review of the agency's performance metrics.  "Metrics should not override audit quality and in some instances we may have let metrics compromise performance of an audit in accordance with the auditing standards," Stephenson said.

Stephenson also announced a review of staffing and the cessation of the agency's participation in integrated product teams.  Staffing has been slashed at the agency over the last 15 years, even as the amount of money awarded to contractors has exploded since 2000.  IPTs were a creation of 1990s acquisition reform and blur the lines between the government and contractors, many argue.  The involvement of DCAA on IPTs ceased "due to concerns with auditor independence," Stephenson said.

The Aug. 6 memo (pdf) states that audit quality should not "suffer or be jeopardized by external factors or internal factors (e.g., agency metrics)."  In the memo, Stephenson called for DCAA auditors to exert their independence against pressures and limitations that program and contracting officers and the contractors may try to impose.

Many of these issues were raised in a critical GAO report on several DCAA field offices in Southern California released a month ago.

-- Nick Schwellenbach

Comments

[wes campbell]

I see the same old crap has continued unabated since I resigned in total disgust in September 1971 (Houston Branch Office) after five years with the Agency. The over-arching focus was NUMBER of reports issued, NOT 'findings/costs questioned" --- straight out of the Atlanta Regional Office. METRICS, MY ASS!! My "specialty" was "manpower utilization" studies (had the primary article published in an issue of The Federal Accountant in 1972), including being an early pioneer in the use of "work sampling" at the Agency. So many decades wasted by an agency that could have saved taxpayers' so much more --- opportunities CONCIOUSLY forgone.

So here we are at one of the meetings going on at Lockheed-Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Booz Allen Hamilton, etc. The topic up for discussion is the possible implications to their multi-billion dollar defense business operations of the GAO Report about DCAA.

The room is full of VP's of Finance; Controllers; Employees from their Government Liaison Offices, Company Lawyers; Outside Defense Consultants (including ex-DCAA Officials); Attorneys from the Washington D.C. Beltway Firms, which are kept on retainers; some of the Washington D.C. Lobbyists; etc.

And here we are at a DCAA field audit office (FAO) at one of the same Defense Contractors. The Resident Auditor and the Supervisor have a GS-12 Auditor in behind closed doors. The Auditor has expressed his/her concern about the annual signing of the "Statement of Independence", even though the Auditor’s Annual Official Performance Rating is due out next week. (Obviously, the timing is not a coincidence.)

Without even asking the Auditor why he/she felt impaired the Auditor is told by the Resident Auditor that, if the Auditor does not sign the "Statement of Independence" by the C.O.B. (close-of-business), the Auditor can no longer work in that FAO. The Auditor must be transferred out immediately. Further, they checked with the RAM (Regional Audit Manager), and were told that the other area DCAA offices were at full strength; so there were no openings at them.

[Paul]

A huge problem within DCAA is that many in high level management positions are unable or unwilling to make decisions without running them through April herself. The end result is needless delays for minor items, causing bottlenecks all the way down the line. The RAM approval on audit findings is a classic example. I have seen great audit findings sit forever until the RAM could be awoken to look at it.

As for Ms. Stephenson, I mean April, maybe she is her own person but I doubt it. She may say don't worry about the scorecard but that is not the message the others are instilling. Where is her leadership now? What is she waiting for?

This GAO issue has created a life of it's own. April cannot tinker with "Audit Quality Days" and Memos. The vast majority of DCAA employees are just plain burnt out with the BS. If it were not for flex days and WAH, the attitude would be much worse. Who knows what this review panal will recommend. I just hope they think about the taxpayer and not saving a bunch of management jobs or blaming some poor auditors. This could be a win, win for everyone involved if they are smart but somehow i don't think our leaders are that smart.

This is a period of possible uncertainty; as to exactly what the outside forces (Members of Congress, and their investigative arm, the General Accounting Office; the DoD-IG; and/or the Defense Business Board) might hope to achieve.

I would expect that certain DCAA officials would want to stay put where they can receive free legal protection from Government attorneys, who work for the Office of the DCAA General Counsel (DL), which is located at the DCAA Ft. Belvoir Headquarters.

In addition they can receive free advice from the DCAA Designated Agency Ethics Official (DAEO), who I believe is the DCAA General Counsel.

In the mean time contingency planning might include creating more high-level management slots in each DCAA Region in order to accommodate a reduction in the number of Regions. This would allow any displaced DCAA officials, who want to stay with the Agency, to be accommodated by being transferred to one of the surviving Regional Offices, or to DCAA Headquarters.

One of the unintended consequences of the GAO report has been to provide unusual public platforms [the POGO and GovExec web sites] across DCAA regional boundaries for employees to express their opinions, and to share their experiences.

As with many ethic and suspicion of fraud hotlines, they have come to be considered by some institutions as nothing more than a tool/early warning system to identify people within the organization, who do not know their place in the scheme of things. On its web site POGO warns employees not to use their Government computers; or office telephones to contact POGO.

In my opinion the flaws in the so-called "Hawkins Letter" are obvious; and should be considered in the same light as the above-mentioned "hotlines".

With regard to "Independence" some years ago the authority to issue audit reports with significant findings was removed from the Field Audit Office’s (FAO) Resident Auditor, or Branch Manager; and put in the hands of the Regional Audit Manager (RAM), who was responsible for that particular office. There were three RAMs in each of the five DCAA Regions. Thus, 15 out of 4,000 DCAA employees controlled the release of all the major reporting by DCAA. In order to improve the integrity of each office this delegation of authority might be revisited.

In point of fact the Regional Offices know exactly what is going on at each FAO.

[M. Jonson]

Let's give away more taxpayer $$$ while the same old cadre of management tries to sustain itself at any cost when it's painfully clear now to everyone that DoD oversight is broken. Are you kidding? DCAA cannot wish it away with bogus Quality day initiatives. DCAA will now forever more be accountable for its oversight to the public. And, the DCAA supervisor below is not fooling anybody by trying to separate April and the rest of DCAA managment from Bill Reed. Let's be clear about one thing: April and the rest of the DCAA's current management did not get their jobs because they disagreed with Bill Reed. Quite the contrary, they enforced his metrics on the audit staff with intimidation and vigor and were rewarded with promotions.

[Mike]

Let's give April a chance. I like what I see so far -- it is refreshing for the Director to share the initatives with the entire workforce. Under Bill Reed that would not have happened. I was a supervisor in Field Detachment when she became the FD Director in 2002. FD had serious audit quality problems when she took over and she was instrumental in turning it around. It appears that she is now faced with the same problems, but on the much wider scale of the entire Agency and it is playing out in the media and in Congress. Based on first hand experience, I am confident April can improve the Agency. When April became FD Director, she had a completely different view of the "scorecard" metrics that prior FD Directors. Her view was "red is not always bad and green is not always good." Her philosphy is that it is worse to be green by cutting corners and producing inadequate audits that to be red. To her, red was not bad if the auditor had a good reason for the actions. My office had many quality issues and she told us that our job was to produce quality audits by training our people, having adequate oversight during audits, and not issuing a report until it is ready -- regardless of the due date. And she meant it. She told us to set the scorecard aside for a year and not worry about it. Just concentrate on the quality audit process. I thought at first she was crazy because no regional director in their right mind would say set the scorecard aside, but her philosphy was right on. Our people improved and the audits were high quality. My concern is that change takes time and since she is probably under a microscope of Congress and the Pentagon, they probably want major change and major initatives today. Change takes time and she often said, it is accomplished brick by brick. Build a strong foundation in an auditor and they can withstand any pressure. Go too fast and build faulty bricks and the house will crumble with the least amount of pressure. Give April time -- she is proven and can do it. But give her time. You may notice that I referred to the Director by her first name -- anyone that knows April knows that she perfers to be on a first name basis of the employees. I wish April the best of luck and I hope she realizes that many employees are standing behind her and pray that she is given the time and resources to accomplish the mission.