Last week, POGO revealed that the Pentagon failed to act on a 2009 legislative proposal from the Defense Contract Audit Agency (DCAA) for enhanced power to compel contractors to turn over internal records.
While few inside DCAA would quibble with the desire for greater subpoena power, there is a debate internally about how aggressive DCAA has been in gaining access to records it should be able to get with the powers it does have.
For instance, in a 2009 Government Accountability Office (GAO) report on DCAA, GAO said, “our discussions with DCAA auditors and reviews of audit documentation identified numerous instances where requests for contractor records were not met.” More info was contained in a footnote in the report, “in these cases, there was no evidence that DCAA supervisors elevated the issue to management or to procurement officials to initiate enforcement action, as set out in DCAA policy.”
POGO inquired further about these instances where DCAA auditors had access to records problems. According to a source intimately familiar with the instances GAO referred to:
…the requests related to support for costs charged to the government and support for training of contractor personnel performing billing and cost estimating functions. Therefore, the information should have been provided to DCAA.
Thus, it seems that DCAA managers have not always supported on-the-ground auditors.
Since the 2009 GAO report, DCAA auditors have continued to say they run into access problems. A cursory search of fiscal year 2010 records from DCAA’s Management Information System database in .pdf format, which POGO obtained through a Freedom of Information Act request, shows some DCAA auditor comments where they note access to records problems. The text of some of them:
- “POTENTIAL ACCESS TO RECORDS ISSUE NEEDS TO BE RESOLVED”;
- “DCMA REQUESTED OUR PARTICIPATION IN THE AUDIT. THEY HAD ACCESS TO RECORDS PROBLEMS AND WITHDREW FROM THE AUDIT”;
- “THE CONTRACTOR DENIED US ACCESS TO THEIR BOOKS AND RECORDS…”
Without more information, it’s difficult to evaluate what was going on in these particular DCAA assignments or how often these issues come up (there are thousands of assignments each year at DCAA, but most do not have any text in the comments field of the database), but it’s clear that from perspective of some auditors, access problems do exist. It is also unclear if these access problems are related to records that DCAA should be able to get under the current interpretation of its access to records power. But POGO’s own conversations with DCAA auditors indicate that these are probably records that DCAA should be able to get even without expanded subpoena power.
This takes us to an obvious next question: what does DCAA do when it doesn’t have the access to records that it should be able to compel? As we mentioned in our post last week, an Associated Press article from 2008 reported that DCAA has not issued a subpoena to compel contractors to turn over records in 20 years.
To reiterate, because of a court-imposed limitation in DCAA’s access to records, DCAA cannot subpoena certain types of contractor records that are not directly tied to a contract (some contractors voluntarily share this type of information however), but it does have power to compel records that are more closely tied to contracts.
If DCAA has not issued a subpoena in over 20 years, yet it has had problems getting access to records within its power to obtain, that is “the definition of a risk-averse audit agency,” one former high-level DCAA official told POGO.
As a penultimate note, DCAA auditor and whistleblower George Spanton testified before Congress in 1983 on the significance of access to records and why it’s a problem when auditors are not supported by management. He testified:
…I defy any auditor to be to do a professional audit without the records, no matter how minimal the limitations. The one record he does not see could be the one that make the entire audit worthless.
The lack of elevation of access to records problems within DCAA also reminds me of another problem that used to exist at DCAA, where DCAA auditor referrals of “suspected irregular conduct by contractors were stymied by DCAA managers in some cases. “Suspected irregular conduct” referrals can lead to procurement fraud and other types of investigations. DCAA changed its policy in 2009 to allow auditors to bypass field office management and submit these referrals directly DCAA headquarters.