Insiders say military contractors are blocking spending on defense access to records. By Nick Schwellenbach | July 22, 2011 | + Week Tweet Last www.ralphlaurenpolosit.com, POGO revealed that the Pentagon had not acted on a 2009 legislative proposal from the Defense Contract Audit Agency (DCAA) for greater power to compel contractors to submit internal records.
While some inside the DCAA would quibble with the desire for greater subpoena power, there is an internal debate over how aggressive the DCAA has been in accessing documents it should be able to obtain with the powers it currently has. For example, in a 2009 Government Accountability Office (GAO) report on the DCAA, GAO stated, "Our discussions with DCAA auditors and reviews of audit documentation identified numerous instances where requests for contractor records were not satisfied." More detail was contained in a footnote in the report: "In these cases, there was no evidence that DCAA oversight authorities elevated the issue to management or contracting officials to initiate coercive action as called for under DCAA policy." POGO requested more information about these cases where DCAA auditors had trouble accessing records.
According to a source familiar with the GAO's findings... the requests pertained to support for costs charged to the government and support for contractor personnel performing billing and cost-estimating functions. Therefore, this information should have been provided to the DCAA.
Thus, it appears that DCAA leadership has not always supported on-the-ground auditors. Since the 2009 GAO report, DCAA auditors have continued to report encountering access problems. A cursory search of fiscal year 2010 records from the DCAA Information Management System database, obtained by POGO through a Freedom of Information Act request, shows some comments by DCAA auditors who encountered record access problems. The text of some of them: "Potential number of records access issues need to be resolved," "DCMA requested our participation in review. They had record access issues and withdrew from review," "Contractor denied us access to their books and records..."
Without further information, it is difficult to evaluate what was happening in these particular DCAA assignments or how often these issues arose (there are thousands of DCAA assignments each year, but most do not have any text in the comments field of the database), but it is clear that from the perspective of some accountants, there are access problems. It is unclear if these access problems pertain to records that the DCAA should be able to obtain under its current interpretation of its access authority. However, POGO's own conversations with DCAA auditors indicate that these are probably records that the DCAA should be able to obtain even without subpoena power.
This brings us to the obvious next question: what does the DCAA do when it doesn't have access to the records it should be able to compel? As we mentioned in last week's post Donna Ralph Lauren Dresses, an Associated Press article reported that starting in 2008 the DCAA did not issue a single subpoena to force contractors to turn over records in over 20 years. Due to court-imposed limitations on DCAA's access to records, the DCAA cannot subpoena certain types of contractor records that are not directly tied to a contract (some contractors voluntarily share this type of information anyway), but it has the power to compel records that are more closely tied to contracts. If the DCAA hasn't issued a subpoena in over 20 years yet still has trouble accessing records within its authority to obtain, that is "the definition of a risk-averse auditing agency," a former high-level DCAA official told POGO.
As a penultimate note, DCAA auditor and whistleblower George Spanton testified before Congress in 1983 on the importance of access to documents and why it is a problem when auditors are not supported by management. He testified: "... I challenge any auditor to perform a professional audit without the records, no matter how minimal the restrictions. The only record one never sees could be the one that makes the lack of control entirely worthless."
The elevation of record access issues within the DCAA also reminds me of another problem that existed at the DCAA, where DCAA auditor referrals of "suspicious irregular conduct by contractors" were thwarted by DCAA managers in some cases. These "suspicious irregular conduct" referrals can lead to contract fraud and other types of investigations. The DCAA changed its policy in 2009 to allow auditors to bypass field office management and submit these referrals directly to DCAA headquarters.
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