Farenish spent the last 13 years at DCAA, which audits the financial records of government contractors, litigates cases involving contractors and is also responsible for suspension and debarment proceedings against contractors.
Prior to DCAA, Farenish served as counsel in the Navy’s Procurement Integrity Office, held criminal investigations posts for the Defense Department Inspector General and Army Criminal Investigation Command, and prosecuted cases during active duty with the Army’s Judge Advocate General Corps.
“Our contractor clients will benefit tremendously from his experience and insights in ensuring that their work is DoD-compliant and can withstand the toughest audit,” said Brock Landry, chairman of Venable’s Government division.
UPDATE: Full story now on FederalTimes.com. Click here.
Embattled Defense Contract Audit Agency director April Stephenson was removed from her post earlier today, the Defense Department has announced.
Stephenson, who was spent her entire career at DCAA, was reassigned to the staff of DoD Comptroller Robert Hale. Hale, who oversees DCAA, replaced her with Army Auditor General Patrick Fitzgerald, said Navy Cmdr. Darryn James, a Pentagon spokesman. Fitzgerald takes over Nov. 9.
The move was announced during an internal teleconference at 2 p.m. today. Following the teleconference DCAA staff was notified via email, James said.
Fitzgerald was chosen to take over the reformation of DCAA because he has “a fresh perspective and new ideas,” James said.
Stephenson’s leadership of DCAA has been dominated by the fallout from two Government Accountability Office reports that found auditors there cut corners, changed audit findings to be favorable to contractors without good cause, and rushed audits to completion to meet cost and management pressures.
At a hearing earlier this year, 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.
More to come soon on FederalTimes.com.
Earlier today I previewed reports the Government Accountability Office and the Defense Department Inspector General will release tomorrow highlighting the depth of auditing problems at the Defense Contract Audit Agency.
But these watchdogs are not the only ones with concerns about DCAA’s audit management. The Wartime Contracting Commission — a bipartisan, congressionally chartered panel tasked with making recommendations to improve contingency contracting — released this report today calling on DCAA to abandon the all-or-nothing approach it takes when rendering opinions on contractor business systems.
In December, DCAA scrapped its opinion that allowed business systems with minor deficiencies to be deemed “inadequate in part.” A prior GAO report that found the auditors in DCAA’s western region were pressured by supervisors to change the middle-ground opinions to “adequate” in order to please contractors. Contractors can only directly bill the government for work if their systems are deemed fully “adequate,” or reliable. If a contractor can directly bill the government, it doesn’t have to go through a lengthy invoice approval process.
But the commission, which has held a series of hearings about the adequacy of contractors’ cost estimating and accounting systems, found the new pass-fail policy increases the government’s risk of wasting money because it diminishes the importance of an inadequate audit finding.
Under the new rules, a system is deemed “inadequate,” or unreliable, if even one minor aspect of the accounting system is broken. Such a blanket finding is “not informative enough to help contracting officers make effective decisions” about how to hold the contractor accountable for fixing problems, according to the commission report.
The report went on to say:
Rather than giving system deficiencies more importance, it seems to have the opposite effect — undermining the significance of the audit findings and weakening their effectiveness…Without any reasonable provision for more accurately describing systems that are less than perfect, contractors and contracting officers find the ‘adequate/inadequate’ options too restrictive.”
A graduated grading system is needed to give contracting officers clear information about the monetary losses that could result from a system deficiency and the level of risk that deficiency poses, so contracting officers can decide how to hold contractors accountable, the report said.
Reforming the Defense Contract Audit Agency will be the topic at a Sept. 23 Senate Homeland Security and Governmental Affairs Committee hearing.
The hearing will examine who is responsible for reforming the DCAA, which lawmakers have discussed relocating to ensure independence from the Defense Department’s comptroller. In a recent report, the Government Accountability Office found that DCAA managers pressured field auditors to change audit results to favor contractors and ignored basic auditing standards to expedite work and meet rigid performance standards.
The hearing will be 10 a.m. in Dirksen Senate Office Building in Washington, D.C., and the Federal Times will be there.
KBR was treated unfairly at a hearing last week discussing the contractor’s performance under the Army’s key logistics contract, a top company official wrote the Wartime Contracting Commission on May 12.
William Bodie, KBR’s interim president for government and infrastructure, wrote in the letterÂ obtained by Federal Times:
At no time during the May 4 hearing was there discussion or reference as to how to evaluate contractor performance in a wartime environment, nor were there any questions probing these issues which are fundamental to the Commission’s mission. Instead the Commission set aside policy debate in favor of judgmental and biased statements against KBR.”
The Defense Contract Audit Agency Â has issued new guidelinesÂ for reporting fraud found during contract audits.
In thisÂ Feb. 9 memo first reported by the Center for Public Integrity, DCAAâ€™s assistant director for operations, Karen Cash, said if an auditor finds potential fraud– such as repeated over billing, false labor charges, improper transfers or bribesâ€”the auditor can refer those cases to the Defense Criminal Investigative Service, even if the auditor cannot prove those questioned costs are fraudulent.
â€œThere is no requirement for the auditor to prove the existence of fraud or other contractor irregularitiesâ€ before referring suspected cases to the Defense investigators, Cash wrote. â€œThe auditor is merely reporting the suspicion of irregularities to the appropriate investigative agencies.â€
The memo urges mangers to support auditors in their reporting of suspected fraud.
According to the Center for Public Integrity report, a DCAA manager denied a request by one of his auditors to report suspected fraud to criminal investigators because the auditor didnâ€™t have adequate proof. That incident happened last January, prior to a July Government Accountability Office report that showed DCAA auditors and managers were not adhering to government auditing standards.