Business Development Opportunity to

Solve the Well Documented DoD Contract Auditing Backlog

Background:  DoD has consistently had difficulty in auditing contracts.  The history is well documented by the DoD IG, CBO, GAO and others over the past ten years.

Needs Synopsis:  DoD is focusing on additional personnel to solve the contract auditing backlog.  That need has been expressed by the DoD IG and was summarized in a Washington Post article on 1 June 2008.  To date, the needs still exist and they are growing worse due to the rapid growth of the DoD budget/contracting requirements over the past five years.

What is Required?:  DoD needs to link their FAR based contract acquisition management system to an intelligent software auditing capability that will track all post award transaction payments through DFAS.  The Defense Contract Management Agency (DCMA) requires documented contract auditing in order to close out DoD contracts.

What is DoD Doing to Solve the Growing Contract Auditing Requirements?:  The Senate Armed Services Committee has recommended adding $26M in FY 09 funding to increase the number of auditors to improve the auditing capabilities of the growing DoD programs while the number of auditors are decreasing.

One Indicator of the Problems Facing DoD Auditors:  In fiscal year 2003, the total value of contracts was $240B and the DoD IG had 180 auditors.  In fiscal year 2007 the total value of contracts was $300B and the DoD IG had 150 auditors.

What does DoD Need to Solve the Contract Auditing Backlogs?:  DoD needs to develop and implement an integrated contract acquisition management and contract auditing system capability which is transaction based and constantly provides transparency of real time transactions through DFAS.  This new tracking capability would actually reduce the need for additional auditors, will provide real time tracking of post award expenditure transactions against all DoD contracts and reduce the current DoD auditing backlog.

What type of Procurement Action Would DoD need to Use to Solve the Contract Auditing Backlog?:  The FAR permits the use of Sole Source procurement actions based on two criteria.  The first criterion is an “urgent need” requirement.  There is no question that the contract audit function of DoD has an urgent requirement.  It has been well documented by both the Executive and Legislative Branches for more than a decade.  The second criterion is a “timely and unique” requirement.  Currently the DoD requirement is to increase the staff size of the DoD IG by approximately 1,500 personnel and then 1,900 by 2013.  A new DoD integrated real time transaction based contract management and contract auditing system would be unique and would provide DoD with a timely audit capability to respond to long term criticisms regarding their inability to fully audit DoD contracts.  In addition a sole source procurement action will eliminate the long standing auditing backlog.

How would the New Administration View this Proposal?:  Since transparency of government financial actions is a major goal of the new Administration for all government spending, it should be very supportive given the legacy of DoD contract auditing backlogs.  The FFATA and S 3077 initiatives, the EESA/TARP initiative and the current American Recovery and Reinvestment Act of 2009 (ARRA) all provide funding with the requirement to integrate accountability and transparency.  In addition, the Administration is stressing transformation through the Technology Innovation Governmental Reform (TIGR) initiative and this proposal meets that requrirement.

What is the Proposed Technical Approach to Achieve an Integrated Acquisition Contract Management and Contract Auditing System for DoD?

Develop a “Demonstration Platform” using a standard portal based contract transaction processing capability that is currently processing post award transactions.  This demonstration platform will meet the requirements of the Administration’s TIGR initiative with existing Commercial off the Shelf (COTS) software and an Enterprise Data Warehouse system.  This approach will demonstrate an “Intelligent” software solution that meets the requirements of the DOD IG Audit challenge[1] through a set of new, TIGR based, real time contract transaction audit capabilities and avoids the need for additional auditors.  Figure 1 presents an overview of the demonstration solution.

 

 

 

 

 

 

 

 

 

 


[1] The solution also meets the requirements of the DFAS Business Activity Monitoring Initiative, Columbus DFAS Financial Integrity Services Team (FIST) Audit Program.