2018 NDAA - Changes to DCAA's Annual Report to Congress

Since 2011, the Defense Contract Audit Agency has published an annual report to Congress. This report was mandated by an earlier NDAA (National Defense Authorization Act) and codified in 10 USC 2313a(a)(2). We've reported on these reports about the time they were issued (see the latest discussion: DCAA's Fiscal Year 2016 Report to Congress).

One of the required elements for DCAA's annual report has been for a statistical table showing an "...assessment of the number and types of audits pending for a period longer than allowed pursuant to guidance of the Defense Contract Audit Agency."

That requirement turned out to be poorly worded because DCAA did not have such guidance. So, the Agency did not need to fess up as to how long it takes them to complete audits. In its latest report, DCAA, in lieu of statistical information, included the following narrative to the requirement to disclose the number of overdue audits:

The timeline for an audit is based on audit type, dollars involved, level of risk, and needs of the requester. As a result, DCAA does not have specific or mandatory time requirements for audit completion; instead, we assess what is necessary to conduct an audit that will meet professional audit standards and provide value to contracting officials. DCAA works closely with contracting officers to set reasonable due dates based on the requirements of the audit and the needs of the buying commands. Additionally, DCAA and contracting officers work as a team to set priorities, create milestone plans, and decide on agreed-to dates. Once these agreements are reached, DCAA assesses timeliness based on meeting those targets.

And that brings us to the Senate's version of the fiscal year 2018 NDAA. The NDAA contains a provision that replaces the requirement that DCAA disclose the number of audits pending longer than allowed pursuant to its guidance with the number of audits pending for a period longer than 18 months. The provision reads:

... the total number and dollar value of audits that are pending for a period longer than 18 months as of the end of the fiscal year covered by the report including a breakdown by type of audit.

That language is still not as tight as it could be as it leaves open the determination of the start date for an assignment. For example, for an incurred cost audit, is the start date the date that DCAA receives the contractor's submission or the date that it starts the audit of that submission? Historically, those two dates have been years apart. DCAA's answer has been, the date that audit work begins.