Congressman Mac Thornberry recently introduced the “Defense Acquisition Streamlining and Transparency Act” to improve the acquisition system and workforce, and improve transparency in the acquisition system. Click here to download the 80-page bill.
SEC. 302. “IMPROVEMENTS TO THE HIRING AND TRAINING OF THE ACQUISITION WORKFORCE” part (e) of the bill requires the DCAA Director to brief the House and Senate Armed Services Committees on:
- The current education, certifications, and qualifications of the Defense Contract Audit Agency workforce, by supervisory and non-supervisory levels and type of position.
- Shortfalls (if any) in education, qualification, or training in the Defense Contract Audit Agency workforce, by supervisory and non-supervisory levels and type of position, and the reasons for those shortfalls.
- The link between Defense Contract Audit Agency workforce skill and experience gaps and the Agency’s backlog of audits.
- The number of Defense Contract Audit Agency auditors who have relevant private sector experience, including from industry exchanges while at the Defense Contract Audit Agency and from prior employment experiences, and the perspective of the Defense Contract Audit Agency on the benefits of those experiences.
- Ongoing efforts and future plans by the Defense Contract Audit Agency to improve the professionalization of its audit workforce, including changes in hiring, training, required certifications or qualifications, compensation structure, and increased opportunities for industry exchanges or rotations.
If the legislation is passed, we anticipate that the briefing will make clear to Congress that DCAA has virtually no private sector experience at any level. While DCAA has made an effort in recent years to hire more personnel from outside of DCAA, the vast majority of these hires have been from other federal agencies, like the Army Audit Agency. Private industry experience is missing and, more significantly, few of those hires come to DCAA with significant experience with Federal Acquisition Regulations (FAR) or Cost Accounting Standards (CAS).
In some cases, these new hires are placed in supervisory or management roles with no experience in the practical application of FAR and CAS, little understanding of risk, and no idea how long it should take to perform a particular audit. This makes it virtually impossible for them to provide appropriate guidance to the auditors who should be held accountable for efficiently performing the audits.
There are few DCAA personnel that have any private sector experience with the challenges faced by government contractors. This is particularly true at the upper management levels of DCAA, whose audit policies reflect an insular Agency with little understanding or respect for private sector challenges or needs. Instead of working with the private sector to develop effective solutions, DCAA uses a misguided interpretation of auditor independence standards to avoid communication with contractors or to consider more efficient ways to effectively accomplish the same audit objectives
Instead of looking at private sector best practices and working with the private sector to develop mutually beneficial solutions, improve Agency processes, avoid over auditing, and provide more timely services, DCAA uses its time-honored excuse for everything: “We don’t have enough staff.”. As if to reinforce this mantra, each year DCAA does less and less auditing, averaging about one audit report for each auditor. They perform virtually no business system audits, CAS compliance audits, defective pricing (post-award proposal) audits, or operations audits because “they don’t have enough staff.”
The private sector has learned that just throwing money at the problem is not necessarily the best answer. In the context of requesting more staff (as the “silver bullet” to solve all of its shortcomings), DCAA displays a degree of arrogance in its unwillingness to first acknowledge and to address its inefficiencies. In fact, merely adding audit staff would simply perpetuate those inefficiencies.
The legislation will not in itself make DCAA perform audits efficiently, but it is a start toward focusing on the real problem. In combination with introducing commercial auditors into the mix (performing at least 25% of the incurred cost audits), Congress is finally introducing external competition which might yield a much improved DCAA. (for additional discussion on this bill, see Redstone Government Insights, May 2017, Congressional Bill Targets DCAA Audit Performance)
Robert (Bob) Eldridge is a Director with Redstone Government Consulting Inc. He provides Government Contract Consulting services to our Government contractors primarily related to compliance with Federal Acquisition Regulations and Cost Accounting Standards, equitable adjustment claims, and business systems. Prior to joining Redstone Government Consulting, Bob served in a number of capacities with DCAA for over 32 years. Upon his retirement, Bob was a Regional Audit Manager with DCAA.
Bob began his DCAA career in 1981 as an auditor-trainee with the Pratt & Whitney Resident Office in West Palm Beach, Florida. Bob served two three year tours at the Defense Contract Audit Institute teaching multiple contract audit courses including “Auditing Internal Controls”, “Technical Management of Audits”, and “Advanced Cost Accounting Standards” and writing Agency courses on Cost Accounting Standards and Equitable Adjustment Claims. He returned to the Eastern Region in 1999, holding various audit positions before ultimately becoming a Regional Audit Manager in February 2007. As Chief of the Eastern Region Quality Assurance Division, Bob was heavily involved in developing DCAA guidance related to auditor consideration of internal controls and risk assessment preparation. In 2012, Bob was assigned to the U.S. Senate Committee for Homeland Security and Governmental Affairs, serving as a subject matter expert on a wide range of federal contract and grant matters for Senator Susan Collins. During Bob’s tenure with DCAA, he had overall management responsibility for audits performed by over 200 employees. He was directly involved in conducting or managing a wide variety of compliance audits, including: forward pricing proposals, incurred cost submissions, business system internal controls, Cost Accounting Standards, claims, and defective pricing. Bob was also directly involved in complex quantitative methods applications, particularly regression analysis and improvement curve applications.
Bob currently specializes in assisting clients with more complex DCAA audit issues related to business system internal controls and Disclosure Statements and with developing and maintaining government compliant accounting and estimating systems. Bob also provides expert advice on compliance with FAR cost principles and Cost Accounting Standards and assists with the more complex forward pricing proposals and equitable adjustment claims.