BACKGROUND:

In fiscal year (FY) 1999, the U.S. Postal Service Office of Inspector General (OIG) entered into an agreement with the Defense Contract Audit Agency (DCAA) to conduct contract audits on its behalf. This partnership benefits U.S. Postal Service contracting officials by arming them with audit reports to help make informed choices when negotiating and managing contracts.

Our objective was to identify contracting trends and issues in FY 2009-2012 DCAA audit reports that presented opportunities for improvement and future benefits for the Postal Service.

WHAT THE OIG FOUND:

The Postal Service reduced its use of DCAA to conduct audits to support contracting actions from 23 audits in FY FY 2009 to just 11 audits in FY 2012. This reduction was due to concerns related to DCAA’s audit quality and timeliness. In February 2010, we began implementing quality assurance procedures to address these concerns and continue to work with DCAA to minimize any potential delays. In addition, we are collaborating with Postal Service officials to enhance the process for requesting DCAA audits.

DCAA audits are cost-effective tools that help Postal Service contracting officials negotiate lower contract costs and manage contracts. These audits have consistently contributed to significant savings and averaged a return on investment of $105 for every dollar spent over the last 4 fiscal years.

During FYs 2009-2012, DCAA audits identified more than $185 million in unallowable and unsupported contract costs; and disclosed internal control weaknesses related to contractors' accounting systems, financial capabilities, and labor charges. These results assisted contracting officials in negotiating lower contract prices and settlements.

WHAT THE OIG RECOMMENDED:

We recommended management emphasize to contracting officials the importance of requesting DCAA audits to support decisions in awarding and managing contracts.