Federal Government Needs Strong, Independent Auditor to Oversee Billions in Contract Spending, POGO Tells Senate Panel

The responsibility of auditing the hundreds of billions of dollars spent each year on defense and civilian contracts should fall to a single, independent agency that is outside of the Pentagon’s chain of command, the Project On Government Oversight (POGO) told a U.S. Senate panel today.

Rather than creating a new bureaucracy, Congress could simply expand the duties of the existing Defense Contract Audit Agency (DCAA), while making it independent of the Department of Defense (DoD), POGO Director of Investigations Nick Schwellenbach told the Senate Homeland Security and Governmental Affairs Committee’s Subcommittee on Contracting Oversight.

Unlike most agencies, a new Federal Contract Audit Agency (FCAA) could save more money each year by uncovering waste and fraud than it would cost to run it. The FCAA would provide a needed check on contractors, ensuring that the government is not overcharged for goods and services.

An independent, central auditor would be more efficient than the current system, under which contract audits are performed by the DoD’s DCAA, small auditing offices in other agencies, contracted auditors, and various Inspectors General. Non-DoD agencies, which currently can utilize the DCAA for a fee, would have a greater incentive to use a central auditor.

It is essential that a new FCAA be given enough resources and authority to succeed. The DCAA is woefully understaffed, and there are also concerns that it is “risk-averse,” not having issued a subpoena to a contractor in more than 20 years.

“Contract auditors provide a great return on investment and save far more money than they cost,” Schwellenbach said. “We believe an FCAA makes sense, but even if DCAA remains within DoD, it needs to be as strong as possible.”

Testimony of Nick Schwellenbach, February 1, 2010.