Report | June 20, 2014

Hotline Allegations Regarding Defense Contract Management Agency Contracting Officer Actions on Several Business System Audit Reports



We conducted this review to determine the validity of a DoD Hotline complaint alleging that a Defense Contract Management Agency (DCMA) contracting officer did not take timely or appropriate action on several Defense Contract Audit Agency (DCAA) audit reports covering the business systems of a large DoD contractor.  


We substantiated the DoD Hotline complaint. Even though the Defense Federal Acquisition Regulation Supplement states that the contracting officer should make a final determination within 30 days, the DCMA contracting officer has taken up to 1,374 days as of March 25, 2014. In addition, the contracting officer has not implemented withholdings for significant deficiencies.

Also, the DCAA field audit office has not conducted timely follow-up audits of the reported business system deficiencies. Finally, DCAA did not obtain sufficient evidence in support of its July 29, 2013, memorandum stating that the contractor appeared to have implemented adequate controls for the remaining estimating system deficiencies.


The Director, DCMA, should:

  • Instruct the contracting officer to make a final determination on the compensation system.
  • Ensure the contracting officer implements withholdings for any disapproved business systems.
  • Develop a written corrective action plan for improving DCMA quality assurance procedures to help ensure timely final determinations and implementation of monetary withholds for significant deficiencies.

The Director, DCAA, should rescind its July 29, 2013, memorandum.

Management Comments and Our Response

Of the five recommendations for DCMA, the Director, DCMA, concurred with two and partially concurred with three. The DCMA comments and planned corrective actions are fully responsive to all five recommendations.

Of the three recommendations for DCAA, the Director, DCAA, concurred in principle with one and did not concur with two. The Director did not agree to rescind its July 29, 2013 memorandum, which addressed the contractor’s estimating system or notify the contracting officer that the memorandum had been rescinded. We request that the Director, DCAA, provide additional comments on Recommendations 2.a and 2.b.