Argh! More bad news about the Defense Contract Audit Agency (DCAA), the watchdog at the Department of Defense that is supposed to watch out for waste and fraud within the agency's enormous contracting apparatus. DCAA was in the news a lot this summer (see here, here, here, and here) after information surfaced showing the DoD spends too little on contract oversight and interferes with current auditors to restrict the length and scope of investigations. It doesn't look like things have improved much since then. The Associated Press reported yesterday that defense contractors, particularly the Bechtel Group, had "chronic failures" in handing over financial records and other documents to the DCAA needed to perform audits. The article also cites Raytheon, Northrup Grumman, and KBR as giving the DCAA trouble. In the widely publicized KBR incident over the summer, top officials at the DCAA would not back up auditors who balked at over $1 billion in unsubstantiated payments. One auditor quoted in the AP article from yesterday hits the nail on the head about why strict oversight by agencies like the DCAA are so important: The Bechtel episode illustrates how tolerant the agency can be when defense contractors slow the government's access to paper records and databases. There is no way to know how often DCAA withholds payments because it does not keep track. And it has not used its subpoena power in 20 years. "We have been basically on the trust system for years," said the auditor who attended the May meeting. "It did not work on Wall Street and it is not working for federal contracts," said the two-decade veteran of the agency who spoke on condition of anonymity because DCAA employees are not allowed to publicly discuss their work. Trust system? Seriously? What ever happened to "trust but verify?"