DoD May Outsource More of DCAA's Work

Last month, the GAO (Government Accountability Office), responding to a request from the Senate Armed Services Committee, issued a report on the effectiveness of DCMA (Defense Contract Management Agency). Based on its review, GAO identified certain on-going challenges that DCMA faces as it performs its mission. One of those challenges is the ability to maintain adequate staffing but the biggest obstacle the Agency faces is DCAA (Defense Contract Audit Agency). Specifically, GAO reported:

One significant source of external risk stems from DCMA's reliance on the Defense Contract Audit Agency (DCAA) to conduct audits of certain contractor business systems. Business systems--such as accounting and estimating systems--are the government's first line of defense against fraud, waste, and abuse. Because of its own workforce struggles, DCAA has lagged in completing a number of such audits and is currently focusing on other high priority areas.

GAO's recommendation to remedy this situation is for DoD to begin using external auditors to get the work done. Specifically, GAO recommended,

The Secretary of Defense should work with DCMA and DCAA to identify and execute options, such as hiring external auditors, to assist in conducting audits of contractor business systems as an interim step until DCAA can build its workforce enough to fulfill this responsibility.

DoD agreed. In its response to the GAO report, DoD stated: 

Concur. The Department will consider alternative approaches to audit contractor business systems.

Something seems amiss. DCAA has more auditors than it has had in a long time. but the DoD continues to realign workload away from DCAA (most proposal evaluations, purchasing systems, financial capability reviews, forward pricing rates, etc). Now, the Department is thinking about outsourcing audits of contractor business systems. The result is more auditors doing fewer audits.

You can read the full GAO report here.