Defense Secretary James Mattis is on a mission to reduce waste in the Defense Department, but the Trump administration’s policies are creating a Catch-22 for Mattis’ work within the Pentagon.

In his first memo as defense secretary, Mattis stated DoD must improve how it does business.

“We owe it to every U.S. citizen to build a military that is as effective and efficient as possible,” the Jan. 31 memo stated.

The Trump administration also said it would strive to cut out waste, fraud and abuse in government; a move reflected in Trump’s choice of fiscal hawk Mick Mulvaney as director of the Office of Personnel and Management.

But, Trump’s push to slim the government may contradict a years-long effort to make DoD more efficient.

The federal hiring freeze, which was meant to trim wasteful positions in government, is having an impact on DoD’s ability to audit incurred costs in contracts.

Incurred cost audits look into claims from companies working for DoD. Some costs are reimbursable under a company’s contract with DoD. The Defense Contract Audit Agency looks into those contracts to make sure they are up to snuff.

“It is absolutely an issue for us because we came into [2017] lower on our end strength than we needed to complete the work we had planned for this year and we were under a hiring freeze in [2016] as a result of the 2016 defense authorization act,” Anita Bales, director of the DCAA told the House Armed Services Oversight and Investigations Subcommittee April 6.

The 2016 NDAA prohibited DCAA from providing audit support to non-defense agencies. Bales said that lowered reimbursable dollars for DCAA, which funded about 10 percent of its workforce.

The point of the NDAA provision was to get DCAA to focus purely on DoD audits, but the law mixed with the hiring freeze had the opposite effect.

“We had to go into a hiring freeze to accommodate that reduction of funding in [2016] so we entered [2017] very low so we wanted to hire back that loss from [2016] as well as our normal attrition” Bales said.

DCAA was planning on hiring 100 people a month and began doing that in the first quarter of fiscal 2017.

But the hiring freeze has kept DCAA from hiring since January.

“We are really getting behind the power curve on our ability to execute the work we need to this year and the later we hire in the year, at this point there is probably no way we can hire enough to complete the number of work years that we need to this year,” Bales said.

She added that about 5,000 employees would allow DCAA to do its portfolio of audits, about 10 percent more than the workforce now.

DCAA is dealing with an incurred cost audit backlog that is currently more than 4,000 contracts deep. The agency as expected to shore that gap by the end of 2018, but Bales said the employment problem is making DCAA reevaluate that date.

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