Senate committee considers contract auditing reform

Tuesday - 2/8/2011, 12:56pm EST

Scott Carr, Producer, Federal News Radio

Click to hear the report.

Download mp3

By Scott Carr
Federal News Radio

The Senate Homeland Security and Governmental Affairs Committee is exploring ways to improve agencies' use of contract audits. An ad hoc Senate Subcommittee on Contracting Oversight held a hearing on ways to improve the way agencies audit the approximate half-trillion dollars paid to contractors each year.

Lawmakers are considering the future of the Defense Contract Audit Agency (DCAA), which - despite its name - also audits most civilian contracts. The DCAA performed more than 11,000 audits last fiscal year - covering about $228 billion worth of proposed or claimed contractor costs. The agency recommended reductions in those contracts of about $13.7 billion.

Government watchdog groups , such as the Project On Government Oversight (POGO), asked the panel to consider creating a new, more robust agency to handle audits. POGO's director of investigations Nick Schwellenbach resurrected the idea of creating a new independent Federal Contract Auditing Agency. Schwellenbach said the best reason for doing so is the de facto status of the DCAA as such an agency.

But, neither Subcommittee chairwoman Claire McCaskill (D-Mo.) or Ranking Member Scott Brown (R-Mass.) seemed to have an appetite for replacing the DCAA with some new overarching agency, or - citing shrinking budgets - increasing the size of DCAA.

McCaskill, herself a former government auditor, said the government is very inefficient when it comes to creating programs.

"I am beyond reluctant, after looking at what happened when we created Homeland Security - and looking at what happens whenever we create a new program, we generally don't check to see if it is really duplicative, generally don't check to see if there's any metrics that [show] the program is really doing what it's supposed to be doing very well. Job training's a great example. So... I'm really not excited about creating a new agency," McCaskill said.

Schwellenbach essentially agreed with her. Others suggested more modest reforms to extend the oversight of the DCAA. Those include giving the agency its own independent general counsel, a review of the size of contracts that are audited and possibly granting the agency the power to subpoena.

Contractors have long complained about the length of time it typically takes to complete audits. Sanderson Hoe, the counsel for the U.S. Chamber of Commerce, testified that among their current concerns is the increased role auditors have been taking in the oversight of contracts, diminishing the role of contracting officers. Contracting officers currently have the authority be the final arbiter for the government in contract matters.

In describing the return on investment the DCAA offers taxpayers by uncovering fraud and abuse, Patrick Fitzgerald, director of the agency, said that while DCAA does deliver, its return is shrinking. Fitzgerald said DCAA has added 500 employees over the last two years but is conducting fewer, though higher quality, audits each year.

Fitzgerald also laid out recommendations for strengthening civilian contract audits. He said this includes giving DCAA the ability to audit civilian contractor systems as they are doing for DoD vendors, and making audit findings a part of contract negotiations.

This story is part of Federal News Radio's daily DoD Report. For more defense news, click here.

(Copyright 2010 by FederalNewsRadio.com. All Rights Reserved.)