Is DCAA’s Reorganization the First Step in the Dissolution of DCAA?

On April 7, 2025, Defense Contract Audit Agency (DCAA) Director Ms. Jennifer Desautel announced a major DCAA reorganization to her staff that is perhaps DCAA’s largest since its 1965 inception. With the current federal government’s stress on efficiency and cost reduction, DCAA faced increased pressure to contain its costs and become more efficient. As a result, Ms. Desautel immediately began reorganizing the field and headquarters offices. DCAA will now have three Directorates (shown below): Land, Sea, and Air.

Gone are the DCAA Regions and DCAA Corporate Audit Directorates (CADs), where the largest defense contractors were audited. Additionally, Headquarters functions will consolidate into a newly established Centralized Audit Function (CAF).

Ms. Desautel further identified that this is the first phase of efforts to streamline and position DCAA for future success, which hints that there is more to come. In her announcement, she identified the closure of 40 offices with fewer than 10 staff each (as shown below). Some of these DCAA offices are located at contractor facilities.

Impact on Contractors

During this time of adjustment, perhaps the largest impact on government contractors is a “Who’s on first?” mentality where it may be cumbersome to find the appropriate DCAA office to send your information to and identify on any proposal activity. In recent years, DCAA has been performing most of its audits virtually with its staff through telework. So, this may not be much of a change for you.

DCAA’s Future

This perhaps hits the larger question, “Will DCAA continue to exist?” Back in July 1965, DCAA was initially founded for efficiency and consistency in contract audits as it was taken from the separate military services (Army, Navy, and Air Force) to be consolidated into a single Department of Defense (DoD) organization. This helped in standardized audit approaches and drove consistency. This also helped to eliminate audit findings focused on “what’s better for my military service” instead of taking DoD into consideration. With DCAA reorganizing under separate air, land, and sea directorates, is this the first step to DCAA reverting back to separate military services? Time will tell, and it may not be long before an answer is reached in today’s fast-paced government reorganization. However, one may ask, “Did we learn anything from the past contract auditing under the separate military services to deem that it will work again?”

Supporting You Through Government Oversight and DCAA Audits

Redstone GCI offers a full spectrum of support to help government contractors navigate the complexities of oversight and audit readiness. Our team provides targeted staff training on working with government agencies, ensuring your team understands what to expect during audits and reviews. We assist in reviewing government submissions to ensure accuracy, compliance, and alignment with regulations. When contractors receive DCAA audit findings, Redstone GCI can step in to help interpret the results and craft well-supported responses. With extensive expertise in DCAA audit requirements, we partner with contractors to reduce risk, improve audit outcomes, and maintain ongoing compliance.