DCMA on the Hot Seat

DCAA (Defense Contract Audit Agency) and DCMA (Defense Contract Management Agency), despite the name similarities, are two separate and distinct Agencies and report to different components within the Pentagon. DCAA reports to the Under Secretary of Defense - Comptroller while DCMA reports to the Under Secretary of Defense - Acquisition, Technology and Logistics. The Defense Contract Audit Agency (DCAA) is the audit arm of the Department of Defense (and for other Executive Agencies). The Defense Contract Management Agency (DCMA) is the Contract Administration arm of the Department of Defense. DCAA issues audit reports to DCMA. DCMA is charged for resolving whatever issues the auditors raise. Sometimes DCAA doesn't like DCMA because the auditors feel that DCMA does not do a good job of sustaining their findings. Sometimes DCMA doesn't like DCAA because they feel that audit reports are issued too late to be of any use or audit findings are not well conceived and therefore unsustainable.

DCMA is also the lead Agency for several oversight roles; EVMS (Earned Value Management Systems) and CIPR (Contractor Insurance/Pension Reviews) to name two major areas. Where DCMA is the lead organization, it typically asks DCAA to address certain financial-related aspects of the required oversight responsibilities. It is against this backdrow that DCMA now finds itself in the DoD-IG's cross-hairs.

In an Audit Report issued on July 28, 2010, the DoD-IG looked into allegations of unsatisfactory conditions regarding actions by DCMA. Specifically, during two reviews of a DoD contractor in 2008, DCMA (i) failed to allow DCAA sufficient time to perform an audit of the contractor's system, (ii) failed to adequately resolve DCAA findings and (iii) failed to demonstrate independence and objectivity in fulfilling its oversight responsibilities (because they teamed up with contractor personnel to perform joint reviews - brings to mind the fable where the fox was allowed to guard the hen house).

Although DCMA essentially disagreed with the DoD-IGs findings, it did agree to seven of the eight recommendations made in the report. You can read the entire IG report here.  Among those recommendations were a new policy to prohibit joint surveillance reviews with contractor personnel, a policy to always request DCAA participation in EVMS reviews, establish reasonable due dates from DCAA, and hold discussions with DCAA to help resolve auditor-reported deficiencies. A followup review by the IG is scheduled to see well how DCMA has implemented these recommendations.