Friday, August 16, 2019

Does DCMA Effectively Resolve Audit Findings?

What is going on between the Defense Contract Management Agency (DCMA), the Defense organization that administers contracts and the Defense Contract Audit Agency (DCAA), the Defense organization that audits Defense contracts? DCAA audits the contracts but it is up to DCMA to resolve any findings that might arise as a result of the audit.

We ask this question because the Defense Department Office of Inspector General (DoD-OIG) recently announced that it would begin an evaluation of  "DoD Contracting Officer Actions Taken on Defense Contract Audit Agency Report Findings Involving Two of the Five Largest DoD Contractors." Those two contractors, as it turns out, happen to be Boeing and Lockheed Martin. Implicit in this announcement is that someone has not been at all pleased with how DCMA is resolving DCAA audit reports. Who? The OIG's announcement does not say. It could be that the OIG has been receiving hotline complaints concerning the manner in which audits are resolved. It could be that the OIG is tracking its own metrics on the percentages of audit exceptions sustained. Whatever the genesis, this is not a routine OIG evaluation.

The OIG has selected a sample of thirty audits for its evaluation. Many of the selections are audits of annual incurred cost submissions. There are several involving Cost Accounting Standards (noncompliances with disclosed cost accounting practices and cost impact when contractors fail to comply with CAS). Also on the OIG's list are audit reports on identified business system deficiencies (usually involving the accounting system) and estimating system deficiencies.

This might become interesting.

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