In April 2026, the Defense Contract Audit Agency (DCAA) released its Fiscal Year (FY) 2025 Annual Report to Congress. Similar to prior years, the report outlines DCAA’s audit performance, recommendations to improve the audit process, industry outreach activities, and key accomplishments. According to the report, in FY 2025, DCAA saved $5.3 billion in defense spending, issued 2,480 audit reports, reviewed $788 billion in contract costs, identified more than $18.8 billion of audit exceptions, and achieved a return on investment (ROI) of $7.50 for every $1.00 invested in audit activities. For comparison purposes, in FY 2024, DCAA reported net savings of $5.1 billion, issued 2,465 audit reports, reviewed $599.8 billion in contract costs, identified more than $15.9 billion of audit exceptions, and achieved an ROI of $7.20 for every $1.00 invested in audit activities. 

Additional takeaways from DCAA’s FY 2025 Report to Congress include: 

• DCAA referenced its critical role supporting the Cost Accounting Standards (CAS) Board, including the conformance of CAS to Generally Accepted Accounting Principles (GAAP) and the increase in the CAS applicability threshold from $7.5 million to $35 million. DCAA likely included this language given that Section 1806 of the National Defense Authorization Act (NDAA) for FY 2026 will prohibit DCAA from serving on the CAS Board beginning January 1, 2028. 

• DCAA reorganized by replacing legacy regions with three mission-focused audit directorates: Air, Land, and Sea. These directorates were designed to deliver audit expertise with greater speed, precision, and impact. 

• The sustention rate on incurred cost audits increased from 31.4% in 2024 to 42.6% in 2025. 

• The ROI across the audit categories varied significantly, ranging from $16.20:$1 for forward pricing audits to $1.80:$1 for incurred cost audits. 

• DCAA coordinated with industry to optimize audit resources and foster a collaborative environment to support ongoing acquisition reform. 

• Independent public accountants were awarded 114 incurred cost audit task orders. 

• DCAA reviewed government property records valued at over $10 billion to accelerate the US Department of War’s (DoW) push to achieve a clean financial audit opinion. 

• DCAA leveraged a risk-based planning process to prioritize workloads. 

To discuss this topic further or to explore its implications for your organization, please contact Tom Reynolds, Partner, tomreynolds@hka.com.

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HKA’s Government Contracting Group