Longtime Whistleblower at the Defense Contract Audit Agency Keeps Discontent Alive

The Defense Contract Audit Agency has racked up its share of detractors over the years, being accused everything from slow processing of reports to leniency toward contractors who overbill the government.

But perhaps its most insistent critic is neither the Government Accountability Office nor a peacenik advocacy group, but one of its own auditors. George Duggan, a Northern California certified public accountant who has spent 25 years with DCAA, has been blasting his superiors since the 1990s, landing him more than once in the role of whistleblower in a Federal Claims Court and before the Merit Systems Protection Board.

Under Director Patrick Fitzgerald since 2009, DCAA has implemented a range of reforms, chief among them the importation of fresh management blood and a risk-based triage strategy for focusing on audits most likely to return money to the treasury. But Duggan insists the agency -- and its overseers in the Defense Department Inspector General’s Office -- could do better.

"Fitzgerald claims his reforms to hire outside DCAA for management talent will change this poor management culture,” he said, “but evidence in DCAA’s western region shows bad managers with the power to hire will hire mirror images of themselves to fill these jobs and the bad audit judgments and abuses to whistleblowers have continued.”

Duggan contends that, so far, there’s been little change from years past when DCAA auditors who won promotions “were cheating on their audits by not following professional standards and issuing more reports than others, the only performance measure valued at DCAA.”

The iconoclastic auditor believes he was the first -- though not the only -- employee to officially warn GAO about the “dysfunction” at DCAA that led to a series of harsh reports accusing the agency of failing to document reasons for signing off on contractors’ billings. Duggan also sought the attention of the Pentagon IG’s office, having been sent home early from Iraq in 2007 by DCAA management with what he considered alarming information about overbilling under billion-dollar contracts. He pointed out problems with major companies supplying U.S. forces with embedded linguists, as well as evidence of irregularities by logistics subcontractors. His allegations were confirmed, he said, in the first of the Iraq war contract cases to proceed to trial in the U.S. Court of Federal Claims.

“DCAA has literally been letting contractors rob the Treasury for years, which is still going on under Fitzgerald, just in a more subtle way,” said Duggan, who has faced four suspensions without pay and been passed over for many promotions. “Fitzgerald refuses to hold malfeasant and negligent DCAA managers accountable and has even created special assistant jobs for high-profile bad managers previously named in GAO and IG reports, actions meant to instill fear in auditors which might otherwise speak out against continuing management negligence and intimidation.”

For years, Duggan’s complaints have been reviewed by Danielle Brian, executive director of the nonprofit Project on Government Oversight. "Between George Duggan's allegations and the continuing stream of critical reports by the Pentagon's inspector general, Congress needs to revisit the DCAA,” she told Government Executive. “Did the reforms actually make things worse? Have we actually neutered our audit watchdog?"

DCAA managers take a more positive view of Fitzgerald’s efforts. Asked to comment, Fitzgerald designated Don Mullinax, who became director of the agency's western region in 2010, supervises 900 employees (Duggan among them) spread over 25 offices in nine states. "Patrick Fitzgerald has made great strides from where we were," Mullinax said, citing DCAA's reported $4.2 billion in net savings for the government in fiscal 2012, its highest in 10 years. His own region has more than doubled the dollars rescued from improper billings, the tally rising from $279 million in 2010 to $447 million in 2012 to $864 million so far in 2013.

"You hear a lot of criticisms about supervisors' lack of experience, and we have pockets of individuals in whom we're building confidence," Mullinax said. "But in the anonymous Office of Personnel Management Federal Employee Viewpoint survey, 72.5 percent [of DCAA employees] nationwide said they have effective leadership from supervisors."

As the western region's first director in DCAA's 45-year history to come from outside the agency, Mullinax, a veteran of Deloitte, Capitol Hill and the Army Audit Agency, said he was "hired to make a positive change in the region's culture and behavior." Mullinax also has looked outside the agency for his own hires. The managers and auditors who come from other backgrounds "are very qualified," he said, and they arrive with advanced accounting degrees and experience at Big Four accounting firms and corporations. While 75 percent of recent hires were internal, he says that he personally interviewed and promoted 14 branch managers.

Mullinax said it's tough to reconcile the charge that DCAA is failing with the "tremendous growth we've seen in the return numbers."

Still, Duggan alleges Fitzgerald stopped a grassroots reform group whose purpose was to determine whether DCAA was promoting managers based on civil service merit principles. And Duggan has used the Freedom of Information Act to pry loose documents he says show that employee complaints to a hotline resulted in “fraudulent investigations” carried out largely by former DCAA managers, leading to “further harassment of the auditor, improperly dropped complaints and investigations languishing for more than three years.”

Duggan objects to DCAA’s creation of an Internal Review Directorate to review employee complaints. He calls it a “useful bureaucratic tool to cover DCAA management malfeasance,” a way of keeping complaints out of the hands of the inspector general -- with the IG’s blessing--and dismissing most of them.

Bridget Serchak, a spokeswoman for the Pentagon inspector general, said Defense requires all department components to designate a component coordinator to report the results of inquiries triggered by Defense hotline referrals. The IRD performs this role for DCAA, she said, adding that her office conducts its reviews while respecting the standards for independence set by the governmentwide council of inspectors general. “We do not compromise our professional judgment in favor of any client organization,” she said.

Mullinax said he works closely with the IRD, "which serves a useful purpose in that instead of having my staff do the investigating, it's turned over to trained professionals." Any employee has the right to make hotline complaints to GAO, the Defense or the IRD, he said. Some of IRD's cases come to it internally, while others might be forwarded from the IG or GAO "if it doesn't fit their threshold.”

Any employee, Duggan included, who disagrees with a supervisor on an audit issue, according to Mullinax, can use a process to elevate the complaint all the way to his deputy, a senior executive for the region. "Mr. Duggan has used that process, and we have resolved issues with him," Mullinax said. "In fact, in some cases he was correct, and we have found common ground."

As he toils in the vineyards of DCAA auditing, Duggan views his experience as a classic illustration of the value of whistleblowers in making government more accountable and effective. “DCAA is the cat litter box of government procurement, and all the DoD management has done is change the kitty litter by covering up bad procurements,” he said. “DCAA is still an underperforming asset, and the taxpayers deserve better."

(Image via Keith A Frith/Shutterstock.com)