Naval Audit Service Wars With Itself Over Cutbacks
By David Abel | Defense Week | 10/18/1999
The aging auditor who has spent decades ensuring the Navy is efficiently using its money and resources may become one of hundreds of victims of the sea service's efforts to cut the fat from its bureaucracy.
The father of two, who asked to have his identity withheld, and some 300 other employees stationed at the Naval Audit Service's 19 field offices from Honolulu to Newport, R.I., have been told they must either accept early retirement, leave with some cash incentives or move to headquarters in Washington, D.C.
For many of those employees, the end of the road will come as soon as next September. The nearly 170 auditors and support personnel in the two regional offices in Virginia Beach and San Diego, however, will not have to move or leave until October 2004. What bothers this career auditor, who might do fine with an early retirement package, is not so much the harsh downsizing recently announced by the Navy's auditor general.
Of course, the loss of 73 positions is hard to swallow. But the problem, he says, is the 402 employees consolidated in the capital will make it more difficult for the Naval Audit Service to carry out the mission he has helped pursue since the 1970s-independently overseeing some $81 billion the Navy spends on everything from designing precision munitions to building aircraft carriers.
"This is not about a bunch of people whining for their jobs," he says. "It's about what's best for the Navy .... The consolidation plan seriously erodes the trust, productivity and overall climate within our agency. The plan is ill conceived, inefficient and counterproductive to internal audit."
Acting Auditor General Richard Leach, who took over this summer after questions were raised about the previous leadership's management, strongly disagrees that consolidation diminishes oversight of the Navy. In an interview with Defense Week, he said the measures to close field offices will increase the Audit Service's efficiency, hew closer to the internal watchdog's evolving mission and help ensure the Pentagon doesn't choose to contract out most of the auditors' current workload.
"I believe it's the right thing to do because it makes good business sense," Leach said. "We really have to become more efficient because the budget's getting lower .... There is tremendous pressure to get smaller everywhere."
Soon after Leach came on the job, one of the first "All Hands" messages he sent to employees announced that Navy Secretary Richard Danzig was reviewing whether 400 Naval Audit Service positions were "inherently governmental," or whether it makes more sense to contract the labor to the private sector.
The review is part of a larger campaign by the federal government known as the A-76 process, which is an effort led by the Office of Management and Budget to scale back Washington's bloated bureaucracy. Those government jobs that can be performed less expensively on the outside will be contracted out. So, if the audit service does not appear to be a tight-belted operation by the time the review ends in 2002, Leach said, the agency stands to lose many of the 400 jobs.
"We don't feel like we can win the bid with the current structure we have," he said. "If we waited, we put many more jobs at risk than if we go ahead and make these efficiencies now."
But auditors say their new chief is effectively cutting off the audit service's nose to spite its face. Less oversight with fewer employees in fewer places where the Navy operates translates into less savings, they say. The fight has become politically charged. In a letter to Sen. John Warner (R-Va.), the chairman of the Armed Services Committee, and the rest of Virginia's congressional delegation, five auditors warned the consolidation could cut into some $7 billion in savings they say the audit service helped identify over the past three years.
Furthermore, they wondered why the Navy was targeted for review, while all the posts in the larger Army and Air Force audit agencies, which together staff some 1,342 employees in 55 field offices throughout the country, were determined to be inherently governmental. And in their own cost analysis, the auditors, whom Defense Week has agreed not to name, said the consolidation plan would cost an extra $2.3 million each year in travel costs and between $5.7 million and $11.4 million to move employees to Washington.
"It is incomprehensible for an agency with an annual budget of $40 million to spend $5.7 [million] to $11.4 million to move employees, who may be contracted out in the near future, away from the source of their work at significantly higher labor and travel costs," the auditors wrote to Warner.
An aide to a member of Virginia's delegation said his office was closely monitoring the dispute. "The critical issue is that there is no falloff in oversight that is independent, internal and free from impairment," the aide said.
The disgruntled auditors also charged the consolidation "circumvents" the A-76 process and gives private contractors an unfair advantage. The Audit Service's bid would be weighed down with a balance sheet featuring large-scale moving and severance costs.
Although 165 auditors recently sent a petition to Danzig to halt the auditor general's plans, they said they didn't expect intervention. "We feel that the Naval Audit Service management is under intense pressure from the staff of the secretary of the Navy to provide considerably less independent coverage," the auditors wrote.
The conflict has reached the point where Leach's office has sent messages to audit service employees warning them against using phones, e-mail and faxes, or any time on the job, to send petitions or organize against the consolidation plan. If they continue to do so, he said, they could be fired. Leach said he understands there's anxiety and fear over his efforts to rein in the bureaucracy. But with some $5.4 million already cut from his projected fiscal 2003 budget, he believes he has to take action now.
"The choice really comes down to: Are we going to lay back and just come up with a position and then try to bid with our sites all around the country," he said. "Then we would get creamed. And, you know, when you lose an A-76 bid, you get 90 days notice. And then you're gone."
Concentrating the staff in Washington, he says, would make it easier to direct audits, save millions of dollars in infrastructure costs and facilitate audits that focus on "Navy-wide corporate issues and systemic vulnerabilities" rather than "lower-echelon" activities.
"Auditing in the 21st century will rely heavily on electronic data retrieval and analysis, video teleconferencing and electronically transmitted audit results," Leach's office said in a point paper prepared for Defense Week. "This will eliminate the need for geographically dispersed permanent audit sites and will greatly reduce the need for travel."
But the auditor who spoke on condition of anonymity flatly disagrees. While the Internet and electronic resources have significantly speeded up audits, he says, you can't seriously oversee a program without spending time onsite. Almost all "functional audits," such as those checking up on flight hours, training programs and readiness, are done outside Washington, he says. And other "fund reviews" require extensive travel.
"Most of the people who are arguing against the field have never worked in the field," he says. "They just don't appreciate the value. But we need to have a presence in the fleet. That's where it's at. That's where the Navy is."