Se­na­tors threaten to scrap De­fense au­di­tor

The Washington Times Weekly - - National Security - BY SHAUN WATER­MAN

Some mem­bers of Congress are so dis­turbed by fail­ures and malfea­sance de­scribed in a re­cent gov­ern­ment re­port that they are con­sid­er­ing re­mov­ing the agency that au­dits hun­dreds of bil­lions of dol­lars in De­fense Depart­ment con­tracts from Pen­tagon su­per­vi­sion.

One leg­is­la­tor said he felt phys­i­cally sick­ened by the re­port.

The law­mak­ers were re­act­ing to find­ings by the Gov­ern­ment Ac­count­abil­ity Of­fice (GAO), the in­ves­tiga­tive arm of Congress, about the De­fense Con­tract Au­dit­ing Agency (DCAA).

The agency, which last year was re­spon­si­ble for en­sur­ing that tax­pay­ers got good value for more than a half-tril­lion dol­lars in de­fense con­tracts, re­vised au­dits to curry fa­vor with con­trac­tors, pro­moted a su­per vi­sor re­spon­si­ble for such re­vi­sions to a top po­si­tion and rushed through other au­dits out of fear that the work would be out­sourced if em­ploy­ees took too much time, the GAO said.

“Un­be­liev­able prob­lems at Def Con­trctng Agncy [sic],” Sen. Claire McCaskill, Mis­souri Demo­crat, wrote on her Twit­ter ac­count just be­fore a re­cent hear­ing on the re­port. “Top of my head is about to pop off.”

“I read a sum­mary of the GAO re­port last night and quite frankly got sick,” said Sen. Tom Coburn, Ok­la­homa Repub­li­can, adding that he would not use all his al­lot­ted time at the hear­ing for ques­tions be­cause he was “a lit­tle bit too up­set to go where I re­ally want to go.”

“Each and ev­ery au­dit that GAO re­viewed for this re­port was out of com­pli­ance with au­dit­ing stan­dards,” said Sen. Joe Lieber­man, Con­necti­cut in­de­pen­dent and chair­man of the Home­land Se­cu­rity and Gov­ern­men­tal Af­fairs Com­mit­tee. The DCAA “has a unique role,” as a stew­ard of tax­payer dol­lars, and con­se­quently “needs to have in­de­pen­dence. It needs to stand up to pres­sures from both agen­cies and con­trac­tors,” he said. “Per­haps it’s time for us to con­sider separat­ing DCAA from the Depart­ment of De­fense and [. . . ] mak­ing it an in­de­pen­dent au­dit­ing agency.”

The flaws iden­ti­fied by the GAO “al­low con­trac­tors to over­bill the gover nment in some cases for mil­lions of dol­lars,” said the com­mit­tee’s rank­ing Repub­li­can, Sen. Su­san Collins of Maine.

Call­ing the DCAA’s per­form- ance “com­pletely un­ac­cept­able,” she noted that when the agency failed, “the fall­out can cas­cade through­out the sys­tem and ul­ti­mately short­change our troops in the field.”

Pen­tagon of­fi­cials told the hear­ing that the GAO in­ves­ti­ga­tion ex­am­ined au­dits con­ducted years ago and that a ser ies of re­me­dial mea­sures al­ready had been im­ple- mented, in­clud­ing a new over­sight com­mit­tee of all the ser­vice comp­trol­lers.

Robert Hale, the un­der­sec­re­tary of de­fense who serves as the depart­ment’s comp­trol­ler and chief fi­nan­cial of­fi­cer, and the of­fi­cial to whom the DCAA cur­rently re­ports, said it might take time for the re­forms to show re­sults and ar­gued against any change in the agency’s sta­tus.

None­the­less, Ms. Collins de­clared her “frus­tra­tion” — a sen­ti­ment widely shared by law­mak­ers at the hear­ing.

In one case, DCAA of­fi­cials had at­tempted an au­dit of a ma­jor U.S. de­fense con­trac­tor do­ing re­con­struc­tion work in Iraq. The con­trac­tor was not named in the re­port, but a per­son fa­mil­iar with the in­ves­ti­ga­tion told The Wash­ing­ton Times that it was Par­sons Corp., a Pasadena, Calif.-based en­gi­neer­ing firm whose work in the past has been crit­i­cized as shoddy.

The GAO re­port said the firm did al­most $900 mil­lion of U.S. gov­ern­ment con­tract­ing in 2004, the year the au­dit started, a quar­ter-bil­lion dol­lars worth of it in Iraq.

Two years af­ter the DCAA be­gan a re­view, in 2006, Stu­art Bowen, spe­cial in­spec­tor gen­eral for Iraq re­con­struc­tion, pledged to in­ves­ti­gate all of the $1 bil­lion worth of con­tract­ing Par­sons had done in Iraq, af­ter ev­i­dence emerged about un­fin­ished and sub­stan­dard work. Last year, he re­leased a re­port charg­ing that the firm had been paid $142 mil­lion for can­celed re­con­struc­tion projects.

The ini­tial DCAA au­dit iden­ti­fied eight se­ri­ous de­fi­cien­cies in the firm’s billing sys­tem. But af­ter the con­trac­tor ob­jected, a su­per­vi­sor or­dered DCAA staff to delete some of the doc­u­ments the au­dit had gen­er­ated and re­vise oth­ers, the GAO found. When the fi­nal au­dit was pub­lished, five of the eight de­fi­cien­cies had been re­moved al­to­gether and the other three down­graded to sug­ges­tions, mean­ing the firm got a “clean” au­dit rat­ing.

That su­per­vi­sor was sub­se­quently pro­moted to be­come the qual­ity as­sur­ance man­ager for the DCAA’s West­ern re­gion, serv­ing as the last line of qual­ity con­trol over thou­sands of au­dits ev­ery year — in­clud­ing many that ended up be­ing ques­tioned by the GAO — a cir­cum­stance Ms. Collins called “dev­as­tat­ing” to morale at the agency.

Erin Kuhlman, Par­sons vice pres­i­dent for cor­po­rate re­la­tions, said the com­pany would not com­ment on the find­ings.

The GAO’s top foren­sic ac­coun­tant, Gre­gory Kutz, told law­mak­ers that his staff had found a “lack of in­de­pen­dence” at the DCAA, which had a “pro­duc­tion-fo­cused cul­ture re­sult­ing in part from flawed met­rics [. . . ] in­tended to show that they could do their work faster and cheaper than pub­lic ac­count­ing firms,” partly be­cause it feared its work might oth­er­wise be out­sourced.

“Tak­ing time to find and ad­dress is­sues was dis­cour­aged,” he added, con­clud­ing that “thou­sands of good au­di­tors [are] trapped in a bro­ken sys­tem” at the agency.

The GAO said that, in the short term, Congress could leg­is­late to pro­vide the agency with the same bud­getary and le­gal in­de­pen­dence that in­spec­tor gen­er­als have.

“This change could strengthen lead­er­ship, in­de­pen­dence and trans­parency,” Mr. Kutz said.

In the longer term, he said, law­mak­ers could con­sider el­e­vat­ing the agency to a “com­po­nent agency” of the Depart­ment of De­fense, re­port­ing di­rectly to the Pen­tagon’s pow­er­ful deputy sec­re­tary; or even mov­ing it out­side the depart­ment al­to­gether, cre­at­ing an in­de­pen­dent au­dit agency.

Mr. Hale, the Pen­tagon comp­trol­ler, told the hear­ing that the ad­min­is­tra­tion op­posed any such move.

In­stead, he said, of­fi­cials were work­ing to strengthen the agency’s in­de­pen­dence within the depart­ment, boost­ing re­sources and im­prov­ing over­sight by es­tab­lish­ing a spe­cial com­mit­tee of de­fense au­di­tors to look at the agency’s work.

DCAA Di­rec­tor Apr il Stephen­son told law­mak­ers that the agency hoped to hire 700 more peo­ple for train­ing over the next three years and had al­ready “com­pletely re­vamped” its qual­ity as­sur­ance pro­cesses.

Mr. Hale pointed out that the au­dits re­viewed by GAO and the in­spec­tor gen­eral “were com­pleted three to five years ago,” and that of­fi­cials had be­gun im­ple­ment­ing cor­rec­tive ac­tions late last year, af­ter the prob­lems were first iden­ti­fied by a DCAA whistle­blower.

But he ac­knowl­edged that the ef­fects of those re­forms might not be vis­i­ble.

“It took us years to get into this prob­lem. It may take sev­eral years for the full ben­e­fit of th­ese ac­tions to be re­al­ized,” Mr. Hale said.


Sen. Claire McCaskill, Mis­souri Demo­crat, took to her Twit­ter ac­count to ex­press her anger over the De­fense Con­tract Au­dit­ing Agency.

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