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News | July 1, 2021

A Short History of DCAA

Editor’s Note: This story is the first in a series of articles celebrating DCAA’s birthday. Future articles will highlight changes in auditing and training.

DCAA was founded on July 1, 1965 when it assumed responsibility for contract auditing for all of DoD. In announcing the decision to create a consolidated audit function, Secretary of Defense McNamara stated, “We have created a new department wide agency, the Defense Contract Audit Agency, to increase efficiency and lower the cost of Government auditing of defense contracts.” The first Director was William B. Petty, former Deputy Comptroller of the Navy.

Initially, DCAA was established as a headquarters element with seven subordinate organizations or regions named for major cities. The regional construct has remained but the names of the regions have changed numerous times switching from cities to geographical regions. The last major reorganization was in 2016 when the Agency realigned to what it is today with three geographical Regions, four Corporate Audit Directorates, and a Field Detachment for classified work.

The first employees were tasked with developing uniform audit guidance from the existing Service audit guidance. This project resulted in the first Contract Audit Manual (CAM), a voluminous document contained in two 3-ring binders, which was updated with pen and ink changes (yes, someone would cross out the old and write in the new words). In the first 10 years of the CAM, a total of 77 revisions were made. Finally, in 1979 the CAM was reprinted but it wasn’t until 1988 that it was printed in a paperback version that was reprinted every year. At last, in 2013 it was moved to an online version. While the content has changed, the CAM remains the document that guides our auditors as they perform their work.

Much has changed over the years but the one constant has been the mission of the Agency. From the very beginning the mission, as laid out in the original document establishing the Agency has focused on “furnishing government procurement and contract administration officials with vital data to use in the negotiation, administration, and settlement of defense contracts. The successful fulfillment of its contract audit responsibilities helps greatly to assure that Government procurement dollars are being prudently spent.” We might write that differently today, but we have maintained the focus on saving the taxpayer’s dollars.