Defense contract audit agency loses focus.

• Author: Thomas, James
• Position: Viewpoint - Excerpt

The following in an excerpt from testimony the National Defense Industrial Association presented to the House Armed Services subcommittee on oversight and investigations.

Industry recognizes that the audit responsibilities of the Defense Contract Audit Agency play an essential role within the Defense Department's acquisition oversight structure and that it operates within a broader set of controls to manage the department's activities throughout the contracting lifecycle.

Industry, taxpayers, Congress and most importandy the armed forces thus all have a common interest in a properly configured and efficient oversight framework focused on risk-based processes and procedures that allow the DCAA to perform its primary role of assisting contracting officers to make decisions.

The agency provides audit and financial advisory services to the Defense Department and other federal entities responsible for acquisition and contract administration. It operates under the authority, direction and control of the department's comptroller/chief financial officer.

The agency's purpose and mission is thus to act as a subject-matter financial advisor to contracting officers on matters related to the transactional as well as contract oversight and closeout processes.

Industry is concerned that the agency has lost focus of its purpose within the defense acquisition system over the past decade and has become much more closely tied with the inspector general function than needed or desired to fulfill its statutory oversight role. DCAA is not a profit center, but its annual reports to Congress highlight that the measure of mission success is that their audit activities provide a large return on investment by identifying a large number of adverse audit findings rather than on executing their primary advisory functions. Industry also questions whether the agency can inherently be truly independent and objective in their audit responsibilities while continuing to emphasize success based upon return on investment.

The Defense Contract Audit Agency asserts that its return on investment to the taxpayer in fiscal year 2015 was $4.80 per dollar spent. While such a figure may seem to be a favorable side effect of performing its central advisory mission, that value computation does not accurately measure all "costs" to the acquisition system for functions that go unfulfilled or delayed.

Nor does it take into account costs for companies to maintain and achieve nearly perfect...