A March 13, 2009 Memorandum for Regional Directors introduces a new level of formality in DCAA’s unceasing quest to intimidate and control contracting officers in the exercise of their discretion.

Contracting Officers have long been reluctant to disregard recommendations made by DCAA with respect to the treatment of costs, notwithstanding the fact that many of DCAA’s recommendations are based on legal conclusions that, by education and experience, auditors are not qualified to make. Indeed, some of these recommendations seem so clearly out of phase with the text and purpose of the applicable regulations that they remind one that, in the 2000 movie “O Brother Where Art Thou?” George Clooney’s character had been imprisoned for the unauthorized practice of law. Nonetheless, DCAA recommendations have a significant chilling effect on the willingness of Contracting Officers to “do the right thing.” Even when the correct decisions are ultimately made, they are often made only after a protracted period of unnecessary angst and aggravation.

But nothing is so bad that it cannot be made worse. Apparently dissatisfied with existing DCAA procedures for elevating “unsatisfactory conditions relating to actions of Government officials” – now, there is a mouthful – which entail the successive elevation of issues and complaints through ascending levels of Government management, DCAA has decided it is time to turn informer and refer these officials to the DODIG for investigation. Now, we are sure that there are a number of instances in which this kind of direct referral makes sense – like bribery and other forms of self-dealing – but, please is it really an IG-worthy event if an auditor believes that a Contracting Officer “awards a contractor unreasonable or excessive costs and/or profit”? That, friends, is the one specific example given by the DCAA MFR of “an action that is grossly inconsistent with procurement law and regulation.”

There are many institutions that, over the years, have used intimidation, threats, and strong arm tactics to arrogate unto themselves a level of de facto power that, de jure, was not theirs to exercise. Many of these have, thankfully, long since passed from the scene. DCAA would be well to remember that it functions as an advisor, not a dictator, and that Contracting Officers are individuals vested with discretionary decision-making powers, not puppets of the audit agency.