With deepest sympathies, ASMC mourns the passing on June 23, 2016 of, Colonel Jerry D. Heard, US Army, Retired, 75 Hokes Bluff, Alabama. Using words of many of his friends, Jerry was "a great Soldier, an inspirational leader, a wonderful mentor, and the epitome of professionalism – may the “Commandant” rest peacefully and we thank you for teaching all of us how best 'To Support and Serve.’” Our sincerest condolences to his family and friends. (Full Obituary)
The Department of Defense (DoD) is making sound progress toward meeting full audit accountability and DoD's leaders expect to meet the goal of full financial statement audit readiness by FY2018, according to DoD's Comptroller Mike McCord.
Testifying before the House Armed Services Committee, McCord told the committee achieving auditability is a key element of Secretary Ash Carter's goal of reforming how DoD does business. He said Secretary Carter and the senior leaders of the Military Departments were committed to “achieving and sustaining auditable financial statements.”
McCord stressed that the successes experienced to date demonstrate that DoD is on track to meet its audit goals. “Our focus on the audit has yielded substantial and measurable results over the past couple of years,” he said. He pointed out that the Military Departments audited their budgets for FY2015 and there have been “successful recurring audits” by other DoD components, e.g., the Defense Finance and Accounting Service (DFAS) and Defense Commissary Agency, and Defense Contract Audit Agency (DCAA).
While McCord noted that the Military Department audits did not receive a clean audit statement, “we learned a great deal from our initial effort.” He said “we are making progress, and are fully committed to getting it done.” DoD has a good audit readiness plan and will stick to it, McCord said.
Appearing with McCord were: Robert M. Speer, Assistant Secretary of the Army (Financial Management and Comptroller), Susan J. Rabern, Assistant Secretary of the Navy (Financial Management and Comptroller), and Rocardo A. Aguilera, Assistant Secretary of the Air Force (Financial Management and Comptroller).
In a joint statement the witnesses told the committee that audit readiness is a top priority for the Military Departments. The Army has been using results from its audits to prepare “corrective action plans to focus efforts and resources on remediating deficiencies.” Navy plans “emphasize sustainable, standardized, efficient business processes, improved controls over business processes, and consolidation of information technology (IT) systems.” The Air Force is working closely with auditors “to prioritize findings and recommendations from the audit and implement cost-effective corrective actions.”
The witnesses emphasized that it takes time for an audit infrastructure to be set in place and to “mature.” For example, it took Homeland Security 10 years to get an unmodified opinion on its financial statements for budget resources totaling $89 billion. DoD has about $1 trillion in budgetary resources.
Nevertheless, they stressed that DOD and the Military Departments remain committed to the goals and benefits from achieving clean financial audits.
Last week, the House passed the FY2017 Department of Defense (DoD) Appropriations bill (H.R. 5293),278-149. Forty three Democrats joined 235 Republicans voting for passage.
House Appropriations Committee chair Rep. Hal Rogers (R-KY) said the bill provides for the defense needs of the country by “funding those military needs that must be addressed now, planning and preparing for the future, and respecting the taxpayer by making commonsense budgeting decisions.”
The House bill would provide $517 billion for the DoD base budget (excluding military construction). The House followed the House-passed FY2017 Defense Authorization bill's plan for funding Overseas Contingency Operations (OCO) by providing only $42.9 billion through April 2017. The president requested $58.6 billion to fund OCO for the entire year. In addition, the House would use $15.7 billion in OCO funding for base budget requirements, increasing total base budget funding to $533 billion.
The House action on OCO funding has drawn a veto threat from the White House. In a Statement of Administration Policy (SAP), the Office of Management and Budget (OMB) called the redirection of OCO funding to the base budget “dangerous and wasteful.” The SAP also complained that this funding approach gambles with warfighting funds and “risks the safety of our men and women fighting to keep America safe, [and] “undercuts stable planning and efficient use of taxpayer dollars.”
The House bill includes an additional $340 million to fund a 2.1 percent military pay raise (the president requested a 1,6 percent raise) that is authorized in the House-passed FY2017 Defense Authorization bill. House bill also would fund the higher active duty (+27,000) and guard and reserve (+25,000) strength levels that would be authorized by the House.
Procurement funding in the bill would buy 15 ships (including three Littoral Combat Ships), 74 F-35 aircraft, 16 F/A-18E/F planes, 72 UH-60 helicopters, 15 KC-46 tanker aircraft, and 123 Stryker upgrades.
With only a few weeks remaining before Congress adjourns for an extended recess for the party conventions, both House and Senate have passed only three FY2017 appropriations bills each. The House has passed the DoD, Legislative, and Military Construction/VA bills and the Senate has passed the Energy & Water, Transportation/HUD, and Military Construction/VA bills. The Military Construction/VA bill, having passed both chambers is now in conference to reconcile the differenced.
Six bills await floor action in the House (Agriculture, Commerce/Justice/Science, Energy & Water, Financial Services, Interior & Environment, and Transportation/HUD) while eight are ready for the floor in the Senate (Agriculture, Commerce/Justice/Science, DoD, Financial Services, Homeland Security, Interior & Environment, Labor/HHS/Education, Legislative).
The House full appropriations committee has not taken action on three bills (Homeland Security, Labor/HHS/Education, and State/Foreign Operations. In the Senate only the State/Foreign Operations bill has not been completed by the Senate Appropriations Committee.
The ASMC National President’s Award is presented to an individual within the defense financial management community who has demonstrated excellence in leadership and in contributions in defense financial management. This year’s ASMC President’s Award is presented to Ms. Marilyn M. Thomas, who currently serves as the Deputy Under Secretary (Management) and Deputy Chief Management Officer of the United States Air Force.
As DoD continues to adjust to new fiscal challenges, Ms. Thomas steered the financial management headquarters review, facilitating the Air Force’s plan to identify a 20% reduction in headquarters positions and funding through streamlining of operations and process improvement. The management headquarters improvement enabled the Air Force to apply savings to protect the Air Force’s top acquisition priorities. Additionally, Ms. Thomas facilitated a more adaptive, agile programming and budgeting process that closed the seams between resource programming and current year execution.
Formerly serving as the Acting Assistant Secretary of the Air Force (Financial Management and Comptroller), she oversaw $110 billion in resources and provided oversight of budgeting, cost estimation, and financial operations in support of Air Force priorities. She served as President of ASMC for two years from July 2012 through June 2014. Ms. Thomas was recently selected as a 2015 Presidential Rank Award recipient.
This week the Senate passed the FY2017 Defense Authorization bill by a large majority.
The bill authorizes force levels, programs, and policies (including military pay raises) for Department of Defense (DoD) budgets and the programs and policies for the Department of Energy (DoE) nuclear weapons program. Appropriations bills provide actual funding.
Senate Armed Services Committee (SASC) chair Sen. John McCain (R-AZ) praised the bipartisan support for the bill saying “I’m very proud that the Senate passed the National Defense Authorization Act for Fiscal Year 2017 with an overwhelming bipartisan vote of 85-13.” Forty-eight Republicans, thirty-six Democrats, and one Independent voted for the bill.
The House passed its version of the defense authorization bill in May 277-147.
The Senate bill would authorize a total of $602 billion, including $543 billion for the FY2017 DoD base budget. The bill also would provide $59 billion for Overseas Contingency Operations (OCO) costs in FY2017, the same amount requested by the president for OCO.
The House bill also authorizes $543 billion for DoD, but provides another $23.1 billion in OCO funding to be used for base budget requirements. The House bill authorizes only $36 billion for OCO through April 2017.
The Senate failed (56-42) to garner the 60 votes needed to approve an amendment by Sen. McCain that would have added another $18 billion to the Senate bill. A proposal by Sen. Jack Reed (D-RI) to add $18 billion to nondefense budgets also failed.
The Senate bill would approve the president’s request for a 1.6 percent military pay raise, rather than the 2.1 percent military raise included in the House bill. The Senate also did not follow the House increases to the authorized active duty and reserve strength levels. Proposals to match the House bill's military pay raise and higher military end-strength levels failed on the Senate floor.
The Senate bill also differs fro the House bill in changes to TRICARE. The Senate would authorize three new TRICARE health plans—TRICARE Prime, TRICARE Choice, and TRICARE Supplemental, while the House bill provides two TRICARE options—TRICARE Prime and TRICARE Preferred.
The Senate bill would require the registration of women for the draft. The House Rules Committee did not allow House consideration of a narrowly approved (32-30) House Armed Services Committee proposal that supported draft registration for women.
The Senate did join the House in rejecting the administration's call for another Base Realignment and Closure (BRAC) round.
Sen. McCain emphasized the bill's support for DoD organization and acquisition reform, calling the bill “the most significant piece of defense reform legislation passed by the Senate in 30 years.”
The Senate bill would reset “the roles and missions of the senior officials in DoD, as well as their relationships with each other.” Legislation would limit the National Security Council (NSC) staff to 150, clarify the role of the Chairman of the Joint Chiefs of Staff (CJCS), and clarify the primary duties of the Combatant Commanders (COCOMs). The Senate would establish a Combatant Commanders Council (COCOMs, Chairman and Vice Chairman of the JCS, and the Secretary of Defense) to assist in the execution of strategy
The bill would lower the number of general and flag officers by 25 percent, reduce the number of authorized four-star billets from the current 41 to 27, cut the number of Senior Executive Service (SES) civilian employees by 25 percent, and reduce spending on contractors by 25 percent by January 2019 from a FY2016 baseline.
The Senate bill's acquisition reforms focus on accountability, new sources of innovation, and an improved acquisition workforce.
The bill would replace the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) with an Under Secretary of Defense for Research and Engineering (R&E) and an Under Secretary of Defense of Management and Support and create a new Assistant Secretary of Defense for Acquisition Policy and Oversight to set defense-wide acquisition and industrial base policy.
The bill would streamline the regulation of commercial items and off the-shelf commercial items and establish preferences for commercial services and fixed-price contracts.
The Senate would authorize more flexible hiring and compensation practices, improve the Defense Acquisition Workforce Development Fund, and establish competitively-selected senior military acquisition advisors in the Defense Acquisition Corps.
The White House, like it did with the House bill, issued a Statement of Administration Policy (SAP) threatening a veto of the Senate bill as passed. The SAP expressed strong objections to the bill's organizational changes, rejection of another BRAC, prescription of contractual methods, and the restrictions regarding detainees at Guantanamo Bay.
House and Senate conferees will now have to adjudicate the differences in the two bills to try to achieve a bill the president will sign.