“Contracting Audit Agency Target of Investigations”
Today’s hearing, before the Senate Committee on Homeland Security and Governmental Affairs, follows two years of investigations by the GAO, the Pentagon inspector general’s office and the Defense Criminal Investigative Service, or DCIS. Calls by DCAA auditors to hotlines triggered those investigations.
DCIS investigators found that managers deleted material from audits without auditors’ knowledge. The managers issued “clean” audit reports without supporting documentation, according to material to be disclosed at the hearing. The DCIS investigators also confirmed that pressure to issue audits on deadline contributed to problems.
The GAO probe found that three DCAA offices under scrutiny had repeatedly diverged from standard accounting practices in their audits. In some cases, agency supervisors allowed contract officials and contractors to subvert DCAA’s independence and “improperly influenced” the scope and findings of audits. The GAO investigators also turned up evidence that managers had tried to intimidate or silence auditors, according to a recent report.
Greg Kutz, GAO managing director for forensic audits and special investigations, said the problems at DCAA may be widespread. “It’s clear that the issues go beyond the 14 audits that we investigated,” he said in an interview.
Hackler’s testimony touches on a contract involving Boeing satellite launch capabilities, including a Delta IV launch vehicle. At issue were complex pricing methods that Hackler said were used to help Boeing recoup some of the hundreds of millions in losses from a failed commercial satellite cellphone business that also involved launches.
Hackler, who supervised audits of the Boeing proposals, said they included “costing methodology” he had not seen before, according to his prepared testimony. Boeing also did not include pricing details from subcontractors, the testimony said. The Air Force awarded a contract granting Boeing the recovery of losses.