By Roger Jordan
Vice President, Government Relations
Recent coverage of the Defense Contract Audit Agency’s problems, including the recent HSGAC Contracting Oversight Subcommittee hearing on February 1, has focused on how the agency has improved its audit processes through risk-based audit strategies that prioritize high-risk contracts and related actions. In testimony and recent interviews with the media, DCAA director Patrick Fitzgerald touted that the changes he’s implemented, coupled with a new contractor business systems rule, will put the agency back on track, he believes.
Admittedly, Fitzgerald has more work to do, and from an industry perspective we encourage him to look at the effect of his reforms on contractors and what further steps must be taken to improve DCAA-industry collaboration. For example, DCAA is still not effectively communicating with industry about corrective action plans contractors implement in response to DCAA audit findings deeming contractors’ systems deficient. In addition, DCAA is taking an excruciatingly long period of time to give contractors’ systems a “clean bill of health” after corrective action plans have proven effective.
Unfortunately, the Senate hearing represented a missed opportunity to focus on these issues.
While the subcommittee hearing focused primarily on improving collaboration between contracting officers and auditors, the equally important challenge of improving communication and collaboration between auditors and contractors went unaddressed.
Sen. Scott Brown, R-Mass., the subcommittees ranking member, however, zeroed in on the real impacts on industry of broader delays in the audit process, specifically addressing DCAA’s backlogs on cost-incurred audits needed to closeout contracts. Brown said:
“Not only are [companies] waiting for close-outs, it is costing them real money, real dollars. So in addition to the healthcare bill, the taxes they are paying, and the regulations they are dealing with, now they are facing audits.”
The same can be applied to DCAA’s delays in re-auditing contractors that have been found to have a deficiency in their systems. DCAA’s use of a “pass/fail” approach for audits, which can result in contractors having deficient systems for even the most minor problems, has resulted in contractors expeditiously implementing corrective action plans to bring their systems into audit compliance. However, contractors have been left waiting for months, or years, for DCAA to return to re-audit and approve their systems. Without such approval, contractors are often prevented from bidding on new contracting opportunities.
But outside of PSC’s statement for the record and the testimony by the law firm McKenna, Long and Aldridge, LLC to the subcommittee on the topic, little else has been said on these issues at the hearing or in post-hearing media coverage.
To date, Fitzgerald has worked diligently to improve DCAA and, to an extent, those efforts have appropriately focused on getting DCAA’s house in order. But DCAA is not the only entity impacted by his initiatives and we’re hopeful that recent signs that he is willing to engage more with industry will lead to future improvements in the audit environment for both the government and the private sectors. Without a doubt, the status quo certainly won’t do.
