DCAA’s Auditing Triage Continues to Draw Criticism

December 4, 2012

The Defense Contract Audit Agency’s two-year-old effort to review fewer contracts and focus on high-dollar returns continues to attract critics.

A recent Pentagon inspector general’s report found problems with the newly reorganized DCAA’s execution of a bid to revamp its audit procedures to stress quality over quantity. The approach -- which involves raising by tenfold the dollar amounts that trigger detailed audits -- could leave as much as $250 million a year in unjustified costs unrecovered, the IG said. Specifically, the report said the Office of Defense Procurement and Acquisition Policy had not performed a “business case analysis” to support the decision to alter DCAA’s priorities in choosing contracts to review.

“Had DPAP evaluated rates of return across the DCAA audit portfolio, DPAP could have achieved the same results by redirecting DCAA resources from low-risk audits and services to higher risk areas of the portfolio,” the report said. It also said DCAA has failed to implement a risk-based planning process as recommended by the Business Board, and criticized a decision to turn over certain auditing duties to the Defense Contract Management Agency that DCMA was not prepared to reliably accomplish.

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