Friday, May 25, 2012

DCAA's First Annual Report to Congress

DCAA's (Defense Contract Audit Agency) first annual Report to Congress has now been released to the public. This isn't just a report that DCAA decided to publish because they thought it would be good PR. No, this report is required by Fiscal Year 2012 National Defense Authorization Act (NDAA) because Congress was concerned about DCAA's performance. Not only does the NDAA require DCAA to issue an annual report but it also specified specific areas that Congress wanted to see addressed in the report. One of those areas is "Significant Deficiencies and Recommended Actions to Improve the Audit Process".

The problems internal to DCAA have been well-documented and widely reported over the past few years; audits that do not comply with professional standards, Agency retaliation against whistle-blowers, chronic failure to issue timely audit reports, significantly increased backlog of incurred costs requiring audit, to name a few. We knew this report was coming and we were somewhat hopeful that it would address some of these major issues. Unfortunately, the section dealing with significant deficiencies barely touched on DCAA's problems. DCAA tries to place the blame elsewhere. Here's a recap of DCAA's four "significant deficiencies".

  1. Its not our fault. DCAA stated that contractors are not submitting adequate proposal packages and thinks that contractors should improve their proposal preparation processes.
  2. Contractors don't care about their internal control systems. DCAA believes that contractors need to be penalized by "invoking a payment withhold".
  3. Contractors won't give us access to records. DCAA wants subpoena power.
  4. We doesn't have enough auditors. DCAA has more auditors now than at any time in the last 12 years but that's not enough.


  1. As a retired DCAA auditor, I found some things interesting in DCAA's report to Congress.

    Question cost in an audit is "pie in the sky". Anyone can question cost! The real issue is how much of the questioned cost is sustained. If DCAA answers that question one may ascertain exactly the effectiveness of the audits.
    Since DCAA is silent in sustained cost, then most likely the sustained cost is low.

  2. Good Point. I forgot all about that stat; cost questioned sustained. It was usually much lower than questioned cost.