Should DCAA be the Federal Contract Audit Agency (FCAA)?

I read an article last week on the Federal Times web site about DCAA’s ongoing problems with audit independence and the allegations that auditors had been pressured to change results in favor of contractors. Allegations with respect to the quality of DCAA’s audits are not uncommon. Some allege that DCAA is too soft on contractors and others that DCAA “has it in for them.” This situation is a little different.

What makes this one different is that GAO investigated the allegations and seems to have found considerable fire under all that smoke. This has led no less than GAO’s Managing Director of Forensic Audits and Special Investigations, Gregory Kutz, and three (count ‘em, three) United States Senators to question whether DCAA should even remain part of the Department of Defense!

Mr. Kutz is reported to have said that “there needs to be an assessment of whether the agency is in the right place organizationally to prevent [such] challenges to its independence.” Senators Joe Lieberman (I-CT), Susan Collins (R-ME) and Claire McCaskill (D-MO) have all questioned whether DCAA should remain under DOD. Even the DCAA Director, April Stephenson, said she would support an evaluation of the Agency’s place within the organization.

Many in the acquisition community have long questioned whether DCAA should, in fact, become the “Federal” Contract Audit Agency or “FCAA.” The majority of civilian agencies already use DCAA for their contract and proposal audits and timekeeping system surveillance. Other than the obvious change in bosses, the only impact associated with disassociating DCAA and DOD would be to require them to account for and bill DOD for services rendered as they do the civilian agencies now.

In fact, it would change their status from a DOD in-house audit agency with a franchise fund service center to an independent agency that funds ALL its activities from client fees. Perhaps the time has come to simply recognize that we need an independent audit arm within the Executive Branch, create it out of DCAA and then mandate that all Federal Agencies use it.

There are precedents. The General Services Administration operates on this model today for commodity acquisition. Even with all its troubles, GSA seems to have a successful model and the model certainly promotes independence.

This change would put the head of DCAA on a par with the Administrators of GSA, NASA, and a host of other independent establishments of the Executive Branch ranging from the CIA to the Peace Corp. It would also require that the new “FCAA” account for its costs in a manner very similar to what it requires of contractors today.

Now there’s irony!

So…

Is DCAA ready to be an independent Executive Agency?