The backlog of incurred cost audits under the Defense Contract Audit Agency (DCAA) has wide-ranging, consequential, and negative impacts for the government and the contractor community— both of whom have an interest in moving rapidly to close out contracts. For the contractor, the government commonly withholds significant funds that should be reconciled and paid in a more timely manner. The government should be able to collect any money that might be determined to be due from the contractor, while there is still time and funds available to be collected. Unfortunately, DCAA’s backlog—and improper accounting of the backlog—prevents either from meeting these goals. GAO’s September 2017 major report confirms the current unacceptable backlog still remains.PSC goes on to recommend that Congress take further actions to reduce the backlog of incurred cost audits by including targeted reforms that allow for the use of independent, third-party auditors. The House version repeals provisions of the 2017 NDAA that allowed for commercial auditor findings for certain DoD contractors to be submitted and accepted by DCAA if the audit adheres to Generally Accepted Government Auditing Standards (GAGAS). But, as PSC noted, that provision contradicts Section 802, the goal of which is to expand the use of supplemental audits performed by public accounting firms.
Whatever happens, it is obvious that no one has confidence that DCAA can reduce its backlog of incurred cost audits while diligently watching over the taxpayer dollar. Civilian agencies are not encumbered with contract audit arms and are free to go out and procure their own contract audit services from private/commercial firms. It seems like some parties would like the Defense Department to go the same way.
You can read the entire PSC letter here.