Senators on Wednesday said the Defense Contract Audit Agency should be made an independent agency — and possibly removed from the Defense Department entirely — because of concerns that Pentagon managers and contractors wield too much influence over the agency's work.

The Government Accountability Office found the DCAA's audit work to be shoddy — agency auditors failed to follow basic auditing standards in 65 of 69 audits GAO reviewed. GAO said a reason for that is that DCAA lacks independence from the contractors it oversees and the Defense Department agencies doing business with those contractors.

Pressures from outside groups contributed to a hostile work environment that led DCAA auditors to race through assessments of contractor billing systems, falsify audit reports, and appease contractors when auditing their business methods and systems, the GAO said in a new report. The report was discussed at a Senate Homeland Security and Governmental Affairs Committee hearing.

Responding to the report, some senators called for an overhaul of DCAA.

"We ought to start over," Sen. Tom Coburn, R-Okla., said at the hearing. "We have got to look at this from the ground up."

GAO recommended that Congress consider making DCAA an independent agency, similar to the status enjoyed by inspectors general. GAO also suggested other ways to increase DCAA's power and independence:

• Provide renewable terms for the director that span presidential administrations.

• Empower the agency with an independent legal counsel.

• Give it stronger subpoena power to obtain records.

• Endow its own budget, not one that is part of the Defense Department's budget.

GAO recommended that the DCAA director report to the deputy Defense secretary rather than the Pentagon comptroller as a way to increase the agency's clout.

"This organization needs bold changes," said Sen. Joseph Lieberman, I-Conn., the committee chairman. "The larger question … is whether, as [GAO] suggested, we ought to take a look at creating a totally independent auditing agency for the federal government overall and go back to the idea of an auditor general."

GAO recommended that, as a long-term solution, Congress create an independent agency charged with auditing all federal contracts.

Both the White House and Congress have called for better contract oversight. "Centralizing the contract audit function and mandating its use by all federal agencies also could provide for consistent audit coverage and bring efficiencies and economies of scale to the contract audit process across the government," the GAO report said.

The Pentagon comptroller, Robert Hale, strongly opposed granting DCAA greater independence because as part of the comptroller's office it "provides valuable services to DoD."

Providing such a change to DCAA's status would improperly inject politics into the agency because its director would need to be confirmed by the Senate. And giving the DCAA director extended fixed terms would rob the Defense secretary of his ability "to choose an appropriate director," Hale said.

"We also question the wisdom on an independent budget, which would prevent or limited our ability to move money into DCAA," Hale argued.

Tell us what you think. E-mail Elise Castelli.