The Effectiveness of the Defense Contract Audit Agency Can Be Improved

FGMSD-79-25: Published: May 10, 1979. Publicly Released: Sep 14, 1979.

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The Defense Contract Audit Agency (DCAA) is the only Department of Defense (DOD) audit organization designated to audit DOD contracts. While DCAA work is generally rated highly by users, the problems that do occur using DCAA products tend to increase government procurement cost.

Failure of some contracting officers to make use of DCAA findings resulted in higher costs to the government. Despite procurement regulations, DCAA many times does not have access to all of the contractor's records necessary for an effective audit. DCAA has not followed up adequately on the reports it issues; and contracting officers often have not provided the feedback necessary for the agency to improve its service. The low priority given to defective pricing reviews seems inappropriate. Time constraints and an excessive work load have sometimes resulted in substandard audit work.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should direct cognizant procurement management officials to: (1) provide the kind of feedback required by procurement regulations and needed by contract auditors; (2) conform to current regulations and established procedures, providing for the review of unaudited and unsupported costs that were available prior to negotiation but not at the time of initial audit; (3) aggressively conform to regulations in regard to the support to be provided to DCAA when access to records problems are encountered; and (4) provide technical evaluations for DCAA review and reporting. The Secretary should direct the Director, DCAA, to establish more aggressive and appropriate follow-up procedures to obtain negotiation results, and to cease entering into agreements with contractors for future access to needed contractor data. In addition, the Secretary should direct DCAA to determine cost-effective threshholds at which preaward work will have preference over other priority work, and to review priorities in regard to defective pricing reviews. Existing policy and directives must be modified to require that matters on which auditors and officers disagree be reported through existing separate channels. DCAA must faithfully follow its procedures for reporting significant matters, concurrently reporting these matters to other internal audit organizations.

    Agency Affected:


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