The office in charge of auditing Pentagon contracts is beset by incompetence and possibly malfeasance that has allowed big defense contractors to line their pockets at taxpayer expense, according to two new government oversight reports.
Last year, the obscure but important arm of the federal government called the Defense Contract Audit Agency looked at $501 billion in contractor costs.
Which is, as it sounds, a pretty important job. But the DCAA isn't doing the job so well, concludes the Defense Department's Inspector General, whose 96-page report on the DCAA was unsealed yesterday and can be read here (.pdf), and the Government Accountability Office, whose own damning report is here.
Let's look at a case that shows how auditor malfeasance can line the pockets of big defense contractors with millions in taxpayer dollars.
The audit in question was on a contract proposal by Boeing involving the Delta IV rocket system. Because of what the IG calls a flawed audit and "lack of auditor independence," the DCAA approved $271 million in improper payments from the Air Force to Boeing, $101 million of which was paid before the IG stepped in and ordered payments halted.
In late 2005, the DCAA manager on the project actually attended a meeting with the brass of the Air Force office who had gotten the Delta IV contract -- also attended by a Boeing representative, according to the IG report. The meeting, as it turned out, was a brainstorming session to push forward on the Air Force's "top priority" of acquiring an "unqualified" audit report from DCAA.
After that meeting, the DCAA manager in question (who is not named) directed the auditor on the case not to pursue a key line of inquiry. In its own bureaucratic language, the IG concludes that the resulting audit isn't worth the paper its written on. The report finds the audit manager failed to "protect the interests of the Government."
A few highlights from the GAO report:
DCAA auditors spent 530 hours to support an audit of a nonexistent billing system and reported adequate system controls.
And:
One auditor told GAO he did not perform detailed tests because "the contractor would not appreciate it."
Here's Sen. Claire McCaskill (D-MO) unloading on officials from the DCAA last week after that GAO report was released:
Other senators, too, have demanded greater accountability from the DCAA, but it's not clear what specific steps are being taken. We're looking into it and will let you know when we find out.

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Bushie
September 30, 2009 11:29 AM
Not mentioned in the article, but important none the less, are enticements offered to or asked by auditors, aka bribes. Who audits the auditors?
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trblmkr
September 30, 2009 12:31 PM
It is going to take years to undo 8 years of decimation at the hands of a cabal that truly believed there is NO role for government or regulation. Contractors will 'police themselves', hah!
For all we know, there maybe hundreds of 'free marketeer' holdovers from the Bush era still employed in audit and IG sections of various executive branch departments.
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Campesino
September 30, 2009 1:03 PM
I thought we just fired IG's that conducted embarrassing audits
http://blogs.abcnews.com/politicalpunch/2009/06/more-details-emerge-in-president-obamas-firing-of-inspector-general.html
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benjoya
September 30, 2009 1:10 PM
speaking of which, what happened to the anti-ACORN legislation that, to be made constitutional, was broadened to include the MIC? seemed like a great idea, passed easily, though i was skeptical POTUS would sign it. pocket veto?
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sbv
September 30, 2009 2:03 PM
where are the supposed senators who were in such a hurry to defund acorn? what about blackwater and kbr who have killed innocent civilians and military personnel alike? what about halliburton and lockheed martin who one would think the iraq war was designed personally to benefit?
if left to the obfuscating gop and those republicans in sheep's clothing calling themselves democrats, the american taxpayer would only exist for their corporate sponsor's benefit.
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benjoya
September 30, 2009 2:06 PM in reply to sbv
i think you nailed it. once they realized the only way they could avoid a bill of attainder was to defund all entities charged with fraud (ACORN, unlike northrup, KBR, etc, hasn't been convicted), they shut up.
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Campesino
September 30, 2009 4:14 PM in reply to benjoya
think you nailed it. once they realized the only way they could avoid a bill of attainder was to defund all entities charged with fraud (ACORN, unlike northrup, KBR, etc, hasn't been convicted), they shut up.
===================================================================
You really need to brush up on your definition of bill of attainder. Merely cutting off funding to an organization doesn't fit it:
The precedent that best reflects most of the original intention of the mandates is from Cummings v. Missouri.[9] It states
A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment.
U.S. v. Lovett was a case historically relevant to taking away pay checks of government workers Congress could accuse of being Communists. This was an asset forfeiture case. It states:
Legislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a trial, are 'bills of attainder' prohibited under this clause.
http://en.wikipedia.org/wiki/Bill_of_attainder
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benjoya
October 1, 2009 10:31 AM in reply to Campesino
while i appreciate your condescending attitude, it's not a stretch to see cutting off funding as "punishment" as per the wiki you so thoroughly researched and probably used as basis for your doctoral dissertation -- otherwise why wouldn't congress simply pass a bill that said "no federal funds for ACORN"?
don't answer that. i've heard enough outa you, but your link to the national review does wonders for your crediblility.
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Campesino
October 1, 2009 1:27 PM in reply to benjoya
You really aren't very bright are you. By your standard, Congress deciding not to buy more F-22 fighters is a "bill of attainder" against Lockheed Martin. Obviously, people in Congress are sharper than you are, and my other link shows they didn't "shut up" because of a bogus attainder issue.
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benjoya
October 1, 2009 3:43 PM in reply to Campesino
will repeat myself for the benefit of the retarded:
why wouldn't congress simply pass a bill that said "no federal funds for ACORN"?
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benjoya
October 1, 2009 3:47 PM in reply to Campesino
no they shut up because something made them write a bill broad enough to catch your heroes in the MIC in its "anti-fraud" language.
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Campesino
September 30, 2009 5:59 PM in reply to benjoya
Uh, no
http://corner.nationalreview.com/post/?q=OTdkMGZhMjM4MzEwOTFmY2MwMGU4YjBkNDk5ZThlNzg=
For years, ACORN has been ladled federal funds by its friend on the Hill. Now, congressional Republicans are working to snip the unseemly relationship, bill by bill. On Tuesday, Sen. Mike Johanns (R., Neb.) gained unanimous support for his amendment to block ACORN from any spillover cash in the defense-appropriations bill. It was the third time this month that Johanns won Senate approval for legislation barring ACORN from taxpayer dollars. Good news, since the Washington Post reports that the bill contains “billions in earmarks.”
Across the Capitol in the House, Rep. Todd Tiahrt (R., Kans.) has devised another way to crackdown on ACORN: end its tax-exempt status under the Internal Revenue Code of 1986. (Watch his floor speech about it here.) Tiahrt’s recommendation comes a week after the IRS decided to break its partnership with the community-organizing group, after years of working together to provide free tax advice to low-income Americans.
Tiahrt tells NRO that the IRS must do more than abandon its ACORN tax-advice program. “The IRS must stop giving ACORN special tax treatment,” he says. “ACORN is using its tax-exempt status for corrupt purposes.”
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benjoya
October 1, 2009 11:39 AM in reply to Campesino
your lack of outrage over massive fraud (by the MIC) is even more telling: you just don't like poor people voting. maybe we should go with the founders' original intent and have the franchise just for rich white male landholders. your man derbyshire seems okay with that.
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witty1
September 30, 2009 4:27 PM in reply to sbv
the real question is which DEMOCRATS are not supportive of real contracting oversight.
they are in the ones in power right now after all.
stop looking to prosecute past crimes and focus on stopping current bad acts and preventing them in the future.
ACORN is a distraction from the where the real money is going.
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witty1
September 30, 2009 2:06 PM
The corruption and theft through government contracting is so pervasive at every single level I don't think anyone can untangle it.
But I do applaud Senator McCaskill for trying.
When all else fails, shame them. When they can't be shamed into acting right - take away their toys.
If all the fraud and waste is removed (or even half of it) we could pay for a public option and more teachers.
I have a rainbow to chase now...
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johnnydoughey
September 30, 2009 9:29 PM
Redistribution of funds....
goes on all the time...
Will continue to be more and more invasive until one of two things occur.
1. We all go completely broke
2. We vote out the two parties who continue to support the corruption and who blatantly protect their cronies...
I put my money (or what's left of it) on number 1
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witty1
October 1, 2009 5:11 PM in reply to johnnydoughey
I vote #1 too.
Isn't this the Fall of the Roman Empire stuff?
Are we gonna find out that all these overpaid executives are actually paying people to wipe their asses because they are too rich to do it themselves?
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douglas kinan
October 1, 2009 10:30 AM
OVERSIGHT? WHAT OVERSIGHT?
By Douglas K. Kinan (Former DoD Employee)
”In its own bureaucratic language, the IG concludes that the resulting audit isn't worth the paper its written on.”
Silence, evasion, false denials, ignoring the facts and the evidence and changing the subject are common tactics by a few DoD officials who commit high crime against their own government and harm innocent citizens for a few bucks.
So, who’s watching the watchdogs? Let's see.
As a former DoD employee, I wrote up the chain-of-command requesting that the DoD Inspector General investigate verified criminal activity by the DCMAE’s Chief Counsel, Bruce Krasker and his former Deputy Counsel, Jerome C. Brennan.
Some of the conduct, funded by millions of taxpayer dollars, included heinous and violent acts against women (and their children), targeting, framing, prosecuting, and punishing innocent individuals, certifying fraudulent promotional certifications which the agency ethics attorney characterized as “criminal,” premeditated and deliberate retaliation, fabricating charges, fabricating official government records, program fraud, witness intimidation, tampering with a witness, prosecutorial misconduct, abuse of power and authority, well-planned discrimination, manipulation of investigations, fraudulent investigations and rewarding cultivated witnesses with jobs, promotions, and awards in exchange for testimony and/or affidavits/depositions that the attorneys and others knew was tainted and/or false and subornation of perjury.
Concerning two of many employees who were framed and fired for violations they did not commit, the DoD Hotline Director, Leonard Trahan, Jr. rationalized the framing this way: “There were two EEO cases in the District in which Mr. Kinan disagreed with the decisions made by [the Equal Employment Manager] and the DCMDE Chief Counsel. Instead of accepting those decisions “as reasonable people can disagree”, they became a ‘cause celebre’ for Mr. Kinan.”
That the person responsible for DoD fraud, waste and abuse would essentially admit that it is okay to frame innocent individuals (a felony), stand by and watch them anguish for 50 - 60 months (cruel and unusual punishment) and allow them to be stripped of their career and full pension is unconscionable and un-American. Even worse, for Trahan to look the other way is dangerous to the DoD and the government. There is no ambiguity in the law. The law did not intend for Trahan to participate in framing innocent citizens. These two frame-ups were “secretly” settled at a taxpayer cost exceeding one million dollars to prevent the DCMAE’s criminal activity from jury review.
In a glaring conflict of interest, the Assistant Inspector General for Policy and Oversight, James L. Pavlik, covered up by conducting a fraudulent investigation, making false official statements and issuing a fraudulent report to deceive Senator Grassley. Contrary to his sworn duty, Pavlik ignored the facts and the evidence. The DoD IG’s General Counsel, Uldric Fiore, Jr., who was responsible for ensuring “independent, accurate and responsible” legal advice and knows that framing an innocent citizen is about the most cowardly and lowest act you can do was “transferred” to Army.
You can’t make this stuff up. The chief fraud investigator for the DoD, Richard Race, covered up by also ignoring the facts and the evidence. On February 19, 2008, Race pleaded guilty to fraudulent banking transactions and on May 2, 2008, was “sentenced” in Judge Leonie Brinkema’s court. Race retired and went on to collect his full government pension.
Chief Counsel Krasker who boasted, “We (the Legal Directorate) can do anything we want. It’s called gaming. We can deny, we can delay…dismiss. We can manipulate the system any way we want.” is now in the process of framing DCMAE employee and whistle blower, Kenneth Pedeleose, using the same modus operandi. Former Deputy IG, Thomas Gimble also covered up the crime.
In a March 29, 2008 AP story by Deb Riechmann, President Bush said, "Any government that presumes to represent the majority of the people must confront criminal elements or people who think they can live outside the law."
Is this oversight? Does this resemble American justice? Will the newly appointed Principal Deputy Inspector General, Lynne Halbrooks do what Gimble did?
dougkinan@yahoo.com - Phone 617-323-6171
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