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.
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.