Report on External Peer Review of DCAA Published

Last November, the Department of Defense, Office of Inspector General (OIG) issued a report on its latest peer review of the Defense Contract Audit Agency (DCAA). With respect to peer review ratings, audit organizations can receive a rating of 'pass', 'pass with deficiencies' or 'fail'. DCAA received a rating of 'pass with deficiencies'. DCAA's previous peer review rating was also 'pass with deficiencies'.

DCAA agreed with the 'pass with deficiencies' opinion and overall conclusions on the documentation and evidence deficiencies. However, DCAA disagreed that the reporting, supervision, and professional judgment deficiencies rose to the level of a system-reportable deficiency. DCAA noted that the OIG overstated the conclusions by citing the same finding under several deficiencies. For example, the OIG cited one assignment for a lack of evidence to an audit position but took the same deficiency and cited DCAA for supervision, reporting, and professional judgment deficiencies.

DCAA agreed to take corrective action that focused on specific findings but since the Agency did not consider the deficiencies to be systemic, that is, widespread throughout the Agency, did not generally agree with OIG recommendations that called for massive Agency-wide re-training efforts.

The OIG disagreed with the scope of DCAA's corrective action plan is some cases and left those findings 'open' in an unresolved state. You can download and read the full Peer Review report from either the OIG's website or the DCAA website.

Now comes Senator McCaskill in her position as Ranking Member of the Senate Committee on Homeland Security and Governmental Affairs asking DCAA to explain their inadequate responses to the OIG's peer review recommendations. In a February 5th letter to DCAA, McCaskill requested DCAA to explain why it did not agree with the OIG's recommendations and specifically, why it did not agree to "implement broader reforms in order to avoid a recurrence of these or similar problems". McCaskill wants DCAA to address the following questions:

1. Why does DCAA believe that these flawed audits indicated the need to improve the performance of audit staff, but not the performance of the supervisors reviewing the work of those staff members?
2. Why does DCAA believe that the deficiencies which led to flawed audits in four offices do not point to the need for additional training agency-wide?

You can read Senator McCaskill's letter here. We'll report on DCAA's response to the letter if we ever get a copy.