According to GAO investigators, "[W]e also found that contractor officials and the DoD contracting community improperly influenced the audit scope, conclusions, and opinions of some audits - a serious independence issue." In GAO speak, this means private companies and people in the Pentagon conspired to conceal wasteful and fraudulent activity by contractors at the cost of the US taxpayer.
Among the findings of the report:
The DCAA resident auditor made an agreement with an unnamed aerospace contractor (determined to be Boeing based on the facts contained in the report), one of the five largest government defense contractors, that "limited the scope" of the audit and would allow the contractor to correct problems that were found before the final audit opinion was issued. [Bullet]The resident auditor replaced uncooperative auditors and intimidated others into making unsubstantiated assessments that benefited contractors at the expense of the government. [bullet]Supervisors assigned complex auditing tasks to underqualified subordinates, resulting in incomplete audits. DCAA officials threatened staff members with retaliation for speaking with GAO investigators. The director of a cost-estimating system for a major defense contractor threatened the DCAA he would "escalate" the issue "to the highest level possible" in the government and within the company in question if the DCAA would not green-light the billing system it identified as problematic. The DCAA failed to revisit contracts that were negotiated by a corrupt (and later convicted) Air Force official. Mistakes, incompetence or intentional deception by the DCAA has essentially built in defective price-estimating systems that may artificially inflate contract estimates for years to come.
The GAO investigation itself was interfered with. In a letter to top members of Congress, the GAO stated: "we noted a pattern of frequent management actions that served to intimidate the auditors and create an abusive environment ... As a result, some auditors were hesitant to speak to us." Nick Schwellenbach, National Security investigator for the nonpartisan government spending watchdog group, Project on Government Oversight (POGO), said that the GAO report "demonstrates that the government's system of contractor oversight is rotten because the independent government agencies that are supposed to look out for the taxpayers are corrupted," adding "we have senior members inside the DCAA who are retaliating against their own members in favor of the private contractors."
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