Audit Readiness

Inside the Pentagon reports today that the Defense Department partially met a key milestone this week on its road to audit readiness:

All of the services and many of the defense agencies have asserted that they are ready to start a schedule of budgetary activity, or SBA, audit for fiscal year 2015, which applies to current-year balances. The department initially aimed to have the statement of budgetary resources -- which also includes prior-year balances -- audit ready by Sept. 30, but have since abridged that goal.

"I want to make it clear that this is a current-year funds audit and not a full audit, but it will bring over 90 percent of our general fund fiscal year 2015 dollars under audit," Pentagon spokesman Cmdr. Bill Urban told Inside the Pentagon in a Sept. 30 email. These comments echoed those made by Pentagon chief spokesman Rear Adm. John Kirby, during a Sept. 30 press briefing.

The next step is to "test these assertions in an actual audit," Urban said. Funds that "won't undergo an SBA audit in FY 2015 are some of the defense activities and agencies," but the hope is to complete these soon, Urban said.

Urban noted that although this effort "represents a lot of hard work by our financial managers" and commanders, there is still more work that must be done in order to meet the deadline of full audit readiness by Sept. 30, 2017. DOD aims to conduct a full audit of its books in FY-18 to comply with the law, Urban said.

In related news, the Government Accountability Office's comptroller general has denied PricewaterhouseCoopers and IBM's protest of an Army contract award to Earnst & Young for audit-readiness support services.

According to the Sept. 5 GAO decision made public today, PWC and IBM challenged "various aspects of the evaluation of E&Y's proposal under the experience, key personnel, and transition plan factors as well as the agency's cost/technical tradeoff. IBM also objects to the award decision on the basis that E&Y took exception to a material solicitation term, and that the agency failed to properly evaluate an alleged conflict of interest."

In a nutshell, GAO found:

1. Agency's decision to consider relevance of projects submitted under experience factor in the aggregate was unobjectionable where solicitation did not require that each individual project be of the same size, scope, and complexity as the solicited requirements.

2. Evaluation of awardee's key personnel was proper where agency reasonably determined that resumes of awardee's proposed personnel demonstrated compliance with solicitation's minimum experience and qualification requirements.

3. Evaluation of awardee's transition plan is unobjectionable where evaluators reasonably concluded that plan complied with the solicitation's requirements.

4. Protest that awardee's proposal took exception to material solicitation terms regarding reallocation of labor hours is denied where statement in proposal was not inconsistent with solicitation requirement that the agency approve any changes to labor hours.

5. Challenge that agency did not adequately investigate an alleged conflict of interest is denied where protester failed to show that agency's determinations regarding the alleged conflict were unreasonable or provide hard facts demonstrating an impermissible conflict.

6. Agency's best-value award decision was not irrational where source selection authority performed a reasonable cost/technical tradeoff that was consistent with the solicitation, adequately-documented, and explains the rationale for awarding the contract to the lower-rated, lower-priced offeror.