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Top Pentagon auditor reassigned

Embattled Defense Contract Audit Agency Director April Stephenson was removed from her post Monday, the Defense Department announced.

Stephenson, who has spent her entire 22-year career at DCAA, was reassigned to “an executive position” on Defense Department Comptroller Robert Hale’s staff, said Navy Cmdr. Darryn James, a Pentagon spokesman. Hale, who oversees DCAA, replaced Stephenson with Army Auditor General Patrick Fitzgerald. Fitzgerald, who leads the DCAA oversight committee Hale established earlier this year, takes over Nov. 9.

Stephenson’s 21-month tenure as DCAA director has been dominated by the fallout from two Government Accountability Office reports that found auditors cut corners, changed audit findings to be favorable to contractors without good cause, and rushed audits to completion to meet cost and management pressures.

Stephenson “implemented a number of improvements to address issues cited in recent GAO reports of DCAA shortcomings,” James said. But he said Fitzgerald is being named the director “because DoD leaders feel he is the best-qualified person to continue making improvements at DCAA. This reassignment is intended to bring in a new leader at DCAA, with a fresh perspective and ideas.”

DCAA performs audits of contractor billing, accounting and management systems to ensure that the companies are accurately charging the government for the work they do.

At a hearing earlier this year, numerous lawmakers on the Senate Homeland Security and Governmental Affairs committee expressed concern over whether someone with a long history inside DCAA could effectively reform it.

In a statement Oct. 26, Sen. Joseph Lieberman, I-Conn., the committee chairman, said, “I hope that the DoD comptroller as well as the incoming DCAA director will continue to bring outside auditing expertise into the agency, strengthen quality control, improve training at all levels of DCAA, and prioritize audits based on the risk of contractor over-billings as well as waste, fraud and abuse.”

Sen. Claire McCaskill, D-Mo., who criticized Stephenson’s insular approach to reforming the agency, said, “This is just a first step in a long list of changes that need to happen at DCAA.”

“There is a culture at DCAA and the Defense Department that has allowed the agency to go so far down this very wrong path,” McCaskill said in an Oct. 26 statement. “While I am encouraged by Comptroller Hale’s recent decision, the Defense Department still has a long way to go before it restores DCAA’s credibility as an auditing agency.”

James said the decision was not the result of pressure from Congress.

In an Oct. 26 e-mail to DCAA staff, Hale told DCAA’s employees that Fitzgerald “has an excellent reputation as a successful manager of a large, geographically diverse audit organization. … I believe that Mr. Fitzgerald is particularly well qualified to guide DCAA during this period.”

In her own e-mail to the staff Monday, Stephenson wrote: “[Fiscal] 2009 was a challenging year with the implementation of many improvements across the agency. I appreciate the dedication and can-do attitude of the DCAA workforce. The many employee suggestions received throughout the year were essential in developing new initiatives and refining prior processes.”

During the last year, Stephenson halted practices that based employee performance evaluations on the number of audits produced and the time they were produced in. She stopped the agency’s practice of allowing contractors to continue using flawed accounting systems. She also ended DCAA participation on contractor evaluation boards with contracting officers and other Defense officials to avoid the appearance that DCAA lacked independence, a key finding of GAO.

The watchdog group Project on Government Oversight, which has been following the DCAA management scandal, said that removing Stephenson won’t fix the problems at DCAA.

“Contractors have been on a rampage fighting new requirements being placed upon them by DCAA for the past year,” said Danielle Brian, POGO’s executive director. “Removing the director of DCAA does not address congressional and taxpayer concerns that this agency lacks the independence and clout necessary to serve taxpayer interests. It would be unfortunate and ironic if congressional inquiries into the independence and strength of DCAA ultimately serves to strengthen the hand of contractors.”