As the DCAA Crisis Continues to Grow

 Stephen A. Avery is a Principal with DCAA Compliance, LLC and the author of  Accounting Policies and Procedures for Small Government Contractors working with DCAA and Other Government Agencies.

Just got a hold of Loeb’s article on DCAA, “DCAA – Is Anyone Home?” and it continues to add fuel to the fire as the crisis within government contracting grows.

Mr. Loeb is a professor of Law at the University of Baltimore School of Law and spent five years as the Executive Secretary and General Counsel to the Cost Accounting Standards Board (1991-2005) and also spent a couple of years as acting deputy administrator of the Office of Federal Procurement Policy. Thus, I will qualify him as one of the Lords of CAS and FAR.

Mr. Loeb’s extensive analysis reaches two main conclusions:

1)      There has been a 400 percent reduction in completed audits since 2008 despite the number of DCAA employees increasing during this timeframe.

2)      The Current backlog of DCAA audits exceeds One Trillion dollar (Not a huge surprise as DCAA admitted to 558 billion back in August).

Mr. Loeb places a great deal of blame on what he calls the “Clericalization” of DCAA as documentation of the process appears to be more important than actually completing the process.

I will add a couple of thoughts from my vantage point of working with several DCAA locations across the country:

1)      After the devastating GAO reports criticizing DCAA’s lack of ability to successfully manage the audits of accounting systems, I heard from DCAA supervisors in 2010 that DCAA would not do any incurred cost proposal audits and only do accounting system audits. I inferred this was a dedication of resources to refute the GAO findings.

2)      Skip ahead to 2012 as word of this backlog begins to circulate, and DCAA schedules an entrance interview with a client on the East Coast for an accounting system audit only to tell us during the first few moments of the audit that DCAA has suspended all work on accounting system audits and now will be focusing only on cost audits. The Army working with DCMA is doing the accounting system audit on this client.

Leave a Reply

Your email address will not be published. Required fields are marked *