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US: Undermining the Auditors: ‘Collaborative Arrangement’ Lets DoD Contractors Slide

Many say the Pentagon's contract oversight system is crumbling under a burgeoning workload, sharp staff cuts, and a less aggressive oversight culture driven by acquisition reforms that promote more partnership and trust between the Defense Department and its contractors.

by David PhinneyFederal Times
April 12th, 2004

A government quality assurance officer in Texas says he repeatedly found defects in aircraft parts being purchased by the Air Force, but his managers refused to address the problem. Instead, they reassigned him to a new job.

In Orlando, Fla., a Defense Department engineer discovered a company double-billed the Navy. The engineer thought the case “smacked of waste, fraud and abuse.” Months later, the engineer was fired.

A Defense Department pricing analyst in Marietta, Ga., struggled for years to bring attention to aircraft parts that were found by investigators to have been fraudulently priced by the contractor. Last year, armed guards escorted him off the contractor’s plant — at his manager’s request.

These are some of the tales that current and former employees of the Defense Contract Management Agency tell with hushed voices. A number of federal auditors interviewed by Federal Times asked not to be identified for this story. Many say the department’s contract oversight system is crumbling because of a burgeoning workload, sharp staff cuts, and a less aggressive oversight culture driven by acquisition reforms that promote more partnership and trust between the Defense Department and its contractors.

“There has been a policy change,” said Joan White, a former DCMA deputy commander who is now a faculty member with the Defense Acquisition University at Fort Belvoir, Va.“Contractors are integral team members. There is a more collaborative arrangement, not an adversarial one.”

Shrinking staffs

Since 1989, the acquisition work force has been cut by more than 50 percent — one of the most dramatic reductions in the entire federal government, which reduced overall employment by 20 percent during the same time. The acquisition cuts far outpaced the 32 percent cut in active military and a 27 percent downsizing of civilians working for the Pentagon.

Some in the field say fewer auditors can’t help but result in more abuses. “If you’re on a highway and there aren’t any police around, what does the public generally do?” asks one DCMA quality assurance specialist in Southern California. “They speed.”

New technology and acquisition reforms have lessened the impact of staff cuts. Commercial, off-the-shelf products and purchase cards have eliminated the need for some oversight. Personnel are no longer needed to rubber-stamp and process orders on buys under $2,500.

Still, DCMA remains an agency stretched to the limit. “The resources that get freed up so far, just sort of go away,” said Sallie Flavin, DCMA’s deputy director.

A military command largely staffed by civilians, DCMA has been especially hard hit from a Cold War high of 25,000 workers to just over 11,000 today. Previously known as the Defense Contract Management Command, the agency was separated from the Defense Logistics Agency in 2000.

The Defense Contract Audit Agency, which works with DCMA workers in identifying overcharges, fraud and other cost irregularities, also has witnessed a staffing cut of 1,500 workers since 1993, to a current level of 4,063. Auditing staff has declined to 3,462.

The workers at these two agencies in particular are the ones who roll up their sleeves and test parts for quality and monitor performance. They sharpen their pencils and analyze proposed prices on bids; keep tabs on cost overruns and billings; and commit contractual fine print to memory so they can make sure requirements and standards are met.

Many say they are committed to their mission because every acquisition dollar that may be frittered away is a dollar unavailable to support the war fighters and domestic needs, but some also see their work increasingly treated as irrelevant.

“A lot of people are more concerned with career development than protecting the soldiers, sailors and airmen,” said one civilian DCMA manager who praises many new acquisition reforms. He blames managers who don’t seem to trust their underlings. “There’s now a culture where the manager is always right. And if problems bubble up from the engineers, contract officer and others with first-hand knowledge, they are frequently disregarded.”

As procurement and contract oversight staffs have been shrinking, Defense’s contracting activity has soared. Prime contract awards have spiked 40 percent between 1998 and 2003. Total obligated contracts have climbed 3 percent in that period. Obligated contract dollars represents money already spent on currently active contracts plus the amount obligated but not yet spent.

Softening oversight

“We’re becoming paper tigers,” said Michael Johnson, a program manager with DCMA in Orlando since 1985. “Frequently instead of doing oversight, we just pass around a lot of paper.”

Now president of the American Federation of Government Employees (AFGE) union local representing DCMA workers in Florida and the Caribbean, Johnson can rattle off tales of DCMA specialists who say they have been thwarted in their work.

Some quality assurance officers say they were reassigned after reporting production flaws, he said. Some say they have encountered violent outbursts from contractors. One former worker recounted getting anonymous death threats over the phone. “Again and again, employees raise an issue, then the contractor raises Cain with higher-ups,” Johnson said. “It gets silenced.”

One former DCMA engineer, William Samble, claims he was fired because of circumstances related to his report on a contractor in Orlando that was overpaid by as much as $50,000 on a $700,000 contract to provide meeting presentations, technical publications, Web site design and similar services to the Navy.

“In my view, this smacks of waste, fraud and abuse,” he wrote in a November 2001 memo to his supervisors.

He also claimed that no deliverables were listed in the contract that could be measured for performance and payment.

Jack Smith, vice president for the Orlando-based contractor, Jardon and Howard Technologies Inc., or JHT, acknowledged the overcharge, but said it was quickly settled at the close of the contract when the firm deducted it from full payment a month later. The Navy continued using its services, he said. The double billing, said company comptroller, Elizabeth Ahern, was caused by “a little billing clerical error.”

Months later, Samble, now 53, was fired — eight months after transferring to DCMA from a job as an engineer at the Naval Aviation Depot in Jacksonville, Fla. “This ruined my life,” he said.

As part of a whistleblower case protesting his dismissal pending before the Merit Systems Protection Board, Samble submitted a sworn affidavit by regional AFGE president Johnson, who now claims to have met with then DCMA deputy commander Joan White, Samble’s supervisor at the time. In that affidavit, Johnson said he and another union official repeatedly asked White to specify examples of Samble’s poor conduct and performance. “Joan White kept referring back to William Samble’s disclosure concerning fraud,” the sworn statement reads. She “would not provide any other examples.”

Contacted by Federal Times, White said she never met with Johnson on the matter. “The statements are all false,” she said after viewing the affidavit. White said she dismissed Samble for performance and conduct issues, but declined to go into details.

White added that clerical errors by a contractor should not be construed as “waste, fraud and abuse.”

Larry Johnson, a DCMA program manager in the Dallas-Fort Worth area and president of the union local with members in Oklahoma, Louisiana and Texas, describes the new climate at DCMA as “catering to the contractor.”

While serving as a quality assurance specialist in 1998, Johnson was assigned to sorting through batches of parts for the revolutionary but troubled V-22 Osprey tilt-rotor aircraft. He repeatedly noted the same defects in the transmission parts for the hybrid plane and helicopter.

DCMA managers ignored his findings and declined to get Bell Helicopter to address his concerns, he said. Instead, he was reassigned to another position in 1998.

“People are forgetting who the real customer is,” said Johnson, who spent seven years in the Air Force and another 14 in the Air Force Reserve. “When I rejected parts, the contractor would run to our management and management would override us.”

Transferred to the position of program analyst — a job that steers him clear of oversight and contact with contractors — Johnson believes he was passed over for promotion because he was too aggressive in his oversight. “We uncover things, and they treat us like criminals,” he claimed. “They just want to get rid of us.”

DCMA deputy William Cecil, with the Bell Helicopter contract management office, acknowledges that Johnson identified some “minor” deficiencies in the parts. “Corrective actions were initiated by management,” he said, adding that Johnson was reassigned during a reorganization in response to changes in acquisition policies and a downsizing of the work force.

At DCMA’s Alexandria, Va., headquarters, deputy director Flavin said she could not address complaints of specific employees and former employees about the agency, but she defended DCMA overall. “In looking at an organization of 11,000 people there is an equal number, if not more people, who have extremely good stories about things they’ve done to save money, to save time and to save the soldier based on the work that they are doing,” she said.

Keith Ernst, director of DCMA East in Boston backed up that thought, saying that the emphasis is to “get the right product, at the right time, at the right price.” He said, “It’s our role to ensure we get fair and reasonable prices. You can gain a lot more with a cooperative, joint effort, but to say partnership is a gross exaggeration.”

Still, Johnson’s complaint is a common one, said Tom Maahs, AFGE council president in Chicago. His union represents 9,000 DCMA employees. Maahs, along with many DCMA employees around the country, said he is reluctant to offer details or names to back up his claim. Employees have heard what happened to others who stepped forward, he said. New personnel laws that empower the Defense Department with flexibility in hiring, reassigning and firing only add to the chilling effect.

“Contract issues will never surface unless they are taken outside the management chain,” Maahs said. “I can just tell you that it’s a fact of life.”

Dina Rasor of El Cerrito, Calif., director of the Military Money Project of the National Whistleblower Center, has worked with Defense workers for more than 20 years and claims employees who speak out about current overcharges and contract mismanagement are “just the tip of the iceberg.” Many more remain silent under pressure from the bureaucracy, she said. “Your career and your life can be ruined.”





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