When the independent investigator questioned those involved with the matter, “several witnesses were deliberately vague in responses”; the investigator also found “recordkeeping is a systemic and significant problem in certain areas” of the agency, including IT and contracting. The report notes that when interviewed, the primary contracting official “[could not] recall discussions from any meetings he attended.” Haynes, according to the draft final report, was “evasive” in interviews.

In a phone conversation with POGO, Haynes said he was forthcoming with the investigator.

As for why there were multiyear financial violations, the preliminary report attributes this in part to the fact that there were “essentially two budget offices with a separate one in IT,” and “there was no oversight of the IT budget personnel by the [agency] budget office.” This meant the agency’s own budget office didn’t know the agency was spending more money than it was authorized to. In a similar vein, Pentagon budget officials also didn’t adequately keep track of the numbers or talk to each other, so one office kept giving away more money than the other had authorized. Given this lack of communication, the draft final report indicates, the Pentagon wouldn’t know if other defense agencies were also spending more than permitted.

“Stonewalling”

A recent lawsuit brought against the agency by a former Apprio consultant alleges that some within the agency knew the project “was at a substantial risk for failure” as early as May 2016. What is certain is that a major turning point in the software project came in November 2016 when contracting officials told Discover Technologies to stop new development in order to free up funds for the agency’s labor budget—in spite of the fact that the project was seen as central to the agency’s “mission execution.” A press release from that month boasts of the system’s rapid development with “minimal resources.” However, over the ensuing months, agency director Lieutenant General Wendy Masiello “became concerned with the spending...and what progress was actually being made,” according to the draft final report. The report describes Haynes as “stonewalling” and “not forthright” with the director. She finally ordered on March 8, 2017, that all development work stop. A few weeks later, she also chartered a “Turn Around Team” with the goal of resolving critical problems in the IT department’s financial management and contracting process.

The Turn Around Team reported some of its findings in May 2017, informing Masiello that the project had far exceeded its funding, used the wrong type of funds, and was far behind schedule. Masiello subsequently requested both an Inspector General audit and an independent investigation into the suspected Antideficiency Act violations. By then, the agency had spent around $45 million on the project, not including government labor costs. Two weeks after the Turn Around Team’s briefing, Vice Admiral David Lewis replaced Masiello. (“She retired at the end of her normal cycle for her rank and assignment,” an agency spokesperson told POGO.)

On April 25, 2018, the Pentagon’s Inspector General released the report that Masiello had requested. The watchdog examined a sample of the agency IT department’s contracts and reported that the vast majority were severely mismanaged: out of 14 contracts, the agency improperly administered 13. The report notes that Lewis agreed with the findings and has begun implementing its recommendations.

“Not Aggressive”

Previous Defense Department Inspector General reports have found fault with the agency’s contract management, beyond the IT department.

A December 2017 audit found the agency was sometimes failing to investigate why contractors provided defective parts or services for the Evolved Expendable Launch Vehicle—a multibillion-dollar Air Force rocket program. A February 2017 review found that agency “contracting officers may have inappropriately reimbursed [Department of Defense] contractors for millions of dollars in unallowable costs.” An October 2015 report says that, in 8 out of 21 cases examined, the agency didn’t withhold payments from contractors even though auditors had found reasons not to rely on the contractors’ “business systems,” which are used to track expenses and justify charges billed to taxpayers. The Inspector General says in these cases the government was “not protected” from potentially excessive contractor billing. A March 2015 report found the agency was violating its own policy by failing to escalate identified problems that went unaddressed in the troubled F-35 fighter jet program, which meant, according to the Inspector General, that F-35 program leaders “may not be aware of problems until they adversely impact the cost, schedule, and performance of the program.” An October 2014 report found “DCMA cannot demonstrate” that its negotiations in “at least $70 billion in Government sales result[ed] in fair and reasonable contract prices.”

DCMA’s shortcomings are not new, but it doesn’t appear that this under-the-radar, yet hugely important, agency has made big enough strides over the last decade. In 2009, the congressionally created Commission on Wartime Contracting wrote, “DCMA is not aggressive in motivating contractors to improve business systems,” which it described as “the first line of defense against waste, fraud, and abuse.” The agency’s “conservative approach results in little, if any, motivation for contractors to improve their business systems, and ultimately has a direct impact on the warfighting mission.”