[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE DEPARTMENT OF DEFENSE: CHALLENGES IN FINANCIAL MANAGEMENT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT ORGANIZATION,
EFFICIENCY AND FINANCIAL MANAGEMENT
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 23, 2011
__________
Serial No. 112-110
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Organization, Efficiency and Financial
Management
TODD RUSSELL PLATTS, Pennsylvania, Chairman
CONNIE MACK, Florida, Vice Chairman EDOLPHUS TOWNS, New York, Ranking
JAMES LANKFORD, Oklahoma Minority Member
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
FRANK C. GUINTA, New Hampshire ELEANOR HOLMES NORTON, District of
BLAKE FARENTHOLD, Texas Columbia
C O N T E N T S
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Page
Hearing held on September 23, 2011............................... 1
Statement of:
Easton, Mark, Deputy Chief Financial Officer, U.S. Department
of Defense; Daniel Blair, Deputy Inspector General for
Auditing, U.S. Department of Defense Office of Inspector
General; and Asif Khan, Director of Financial Management
and Assurance, Government Accountability Office............ 5
Blair, Daniel............................................ 19
Easton, Mark............................................. 5
Khan, Asif............................................... 40
Letters, statements, etc., submitted for the record by:
Blair, Daniel, Deputy Inspector General for Auditing, U.S.
Department of Defense Office of Inspector General, prepared
statement of............................................... 21
Connolly, Hon. Gerald E., a Representative in Congress from
the State of Virginia, followup questions and responses.... 87
Easton, Mark, Deputy Chief Financial Officer, U.S. Department
of Defense, prepared statement of.......................... 8
Khan, Asif, Director of Financial Management and Assurance,
Government Accountability Office, prepared statement of.... 42
THE DEPARTMENT OF DEFENSE: CHALLENGES IN FINANCIAL MANAGEMENT
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FRIDAY, SEPTEMBER 23, 2011
House of Representatives,
Subcommittee on Government Organization, Efficiency
and Financial Management,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2154, Rayburn House Office Building, Hon. Todd Platts
(chairman of the subcommittee) presiding.
Present: Representatives Platts, Lankford, Towns, and
Connolly.
Staff present: Molly Boyl, parliamentarian; Sharon Casey,
senior assistant clerk; Justin LoFranco, deputy director of
digital strategy; Mark D. Marin, director of oversight; Tegan
Millspaw, research analyst; Jeff Wease, deputy CIO; Nadia A.
Zahran, staff assistant; Jaron Bourke, minority director of
administration; Beverly Britton Fraser, minority counsel;
Jennifer Hoffman, minority press secretary; Carla Hultberg,
minority chief clerk; and Adam Koshkin, minority staff
assistant.
Mr. Platts. The committee will come to order.
Today's hearing will continue the focus on improving
financial management throughout the Federal Government. I
certainly want to welcome our witnesses and guests; and up
front I want to say I appreciate the rearranging of everyone's
schedule, as we were originally planning to be with you last
week. I am glad it worked out to be with you today.
The Department of Defense is the largest department of the
Federal Government and spent $691 billion in 2010. Due to the
size of its budget and the importance of its mission, it is
imperative that DOD have proper financial management in place.
DOD, unfortunately, has never been able to produce
auditable financial statements and has been on GAO's high-risk
list since 1995 due to pervasive and systemic deficiencies
regarding its financial management. In 2010, the Inspector
General identified 13 areas of significant weaknesses in DOD's
internal controls and financial management.
Despite numerous financial reforms, DOD continues to be
susceptible to waste, fraud, and abuse. It is particularly
susceptible to improper payments. The amount of improper
payments issued by DOD is not specifically known, but both GAO
and the Inspector General have raised concerns and identified
areas where improper payments are known to occur. In
particular, the Inspector General's office found that DOD was
making significant overpayments in high-dollar programs and
that, unless the Department improves its oversight, it will
continue to make significant improper payments.
In an attempt to improve financial management at DOD,
Congress established a deadline to make all components of the
Department ready to undergo a financial audit by 2017. This is
a deadline that DOD is taking very seriously, and its efforts
to improve financial management are admirable and certainly
very much appreciated. However, there are numerous issues that
the Department must address in order to be successful in
meeting this deadline.
To meet the deadline, DOD developed the Financial
Improvement and Audit Readiness plan. The plan is designed to
improve and strengthen DOD's financial management through a
series of gradual phases in benchmark goals. If the Department
follows this plan successfully, it will be able to meet the
deadline for audit readiness and significantly improve key
weaknesses in its financial management.
Successful implementation of the plan remains in doubt,
however. Already the Air Force has said it may have trouble
meeting the 2017 deadline due to the fact that its financial
management systems were created in the 1970's and need to be
updated significantly.
GAO and OIG have found that system modernization is a
challenge to DOD. There are also concerns that, while the
Department may be able to devote enough resources to
successfully produce a one-time auditable financial statement
in 2017, it will not be able to develop systems sufficient to
achieve auditable statements on a continuing basis; and that is
something I definitely will be looking to touch on and the
sustainability of the improvements in auditable financial
statements, not just a heroic effort to meet a one-time
obligation.
Strong financial management is crucial in order for a
government to operate effectively, prevent waste, fraud, and
abuse. DOD's increased focus on improving its financial
management is, again, commendable and appreciated.
Today, we will hear from our witnesses about the challenges
the Department faces in improving its financial management and
producing auditable financial statements. I certainly look
forward to your testimony, and this committee looks forward to
continuing to work with you to increase efficiency,
accountability, and good financial management at the Department
of Defense.
Ultimately, improvements to DOD's financial management
systems are critically important to protecting taxpayer dollars
and, most importantly, to ensuring that we maximize our
Nation's financial resources for many of the needs of our
warfighters in harm's way who defend our freedoms with great
courage and dedication.
And I, before yielding to the ranking member, would
emphasize that, while we will be discussing some of the
challenges within the Department on financial management and
how we can partner with you, I also want to recognize the
heroic efforts of all the men and women in uniform and all of
our DOD civilian personnel who throughout the history of this
Nation and as we speak have been heroic on the frontlines of
democracy in defense of all of our freedoms and the great
blessings we as Americans enjoy. And, you know, if we are more
successful in financial management, we can even better support
those men and women in uniform in their heroic work.
With that, I am honored to yield to our ranking member, Mr.
Towns from New York, for the purpose of an opening statement.
Mr. Towns. Thank you very much, Mr. Chairman, and also let
me thank our witnesses for being here.
These are tough times in America. People are losing their
jobs, and many others can't find work. Programs that support
those most in need are being cut in order to save money. Every
family in America is tightening its belt and keeping a tight
rein on the checkbook because it gets more difficult every day
to stay solvent. These families have a right to expect that our
government will do the same.
For more than any other single government agency, it is the
Department of Defense that justifies public skepticism about
how they are government stewards of public funds, and it is the
Department of Defense that this Congress should be holding
accountable.
The Department has been required to produce auditable
financial statements since 1997. We are now 14 years past this
deadline, and the Department has still not met the requirement.
This committee routinely examines the financial statements of
other Federal agencies. In fact, 22 out of 24 agencies subject
to the Chief Financial Officer [CFO] Act have produced clean
audits of their financial statements, but not DOD.
I find it unacceptable that year after year a Federal
agency that spends between $2 and $3 billion every day cannot
keep track of the money that the American taxpayers has
entrusted to it. What is worse is that the problems exist even
though the Department has over 2,200 separate business systems
in place to help account for finances.
Financial statements and unqualified audit opinions are
excellent indications that an organization is performing
efficiently as Congress intends. Unfortunately, due to
pervasive deficiencies in internal controls and financial
management that would not be tolerated in any other Federal
agency or the private sector as well, we cannot be assured that
funds entrusted to the Department are spent prudently or even
correctly.
I hope that our witnesses today can shed some light on the
current drive to generate financial statements at the
Department of Defense that are auditable. I am especially
interested in hearing how the Department plans to keep the
leadership engaged in the financial management overhaul until
you achieve success. I also want to know how you are going to
keep people on task, day in and day out, until the Department
has auditable financial statements.
And, most importantly, I would like to hear what the
Department is doing to integrate its 2,200 separate business
systems so that we don't have duplication and confusion that is
currently present in your financial management structure today.
The deadline for accomplishing this is exactly 6 years
away, on September 30, 2017. In the past, we have seen
deadlines come and deadlines go with little change.
Today, we are joined by witnesses who are key players in
helping the Department of Defense improve its financial
management processes. I would like to thank you for your
testimony in advance, and I am looking forward to hearing how
the current initiatives will bring permanent and successful
change to the financial management process by the 2017
deadline.
And, Mr. Chairman, I want to thank you for staying with it
to try and make certain that we are able to get the information
that we need so people have confidence in what they are doing
as well.
Thank you very much, and I yield back.
Mr. Platts. I thank the gentleman.
The ranking member and I have been partners on this effort
for almost a decade now. Because when I chaired from 2002--or
2003 to the end of 2006, Mr. Towns was my ranking member; and
then he chaired the subcommittee, and I was his ranking member.
Now we have switched places again, but we share the focus on
good government and especially financial management and, in
this case, with the Department.
We will keep the record open for 7 days for any of the
committee members who want to submit their own opening
statements and for any extraneous material that we will receive
here today or thereafter.
We certainly welcome our witnesses: Mr. Mark Easton, who
serves as Deputy Chief Financial Officer for the Department of
Defense; Mr. Daniel Blair, who is the Department of Defense
Deputy Inspector General for Auditing; and Mr. Asif Khan,
Director of Financial Management and Assurance at GAO.
Pursuant to our committee rules, if I could ask all three
of you to stand and we will swear you in.
Would you please raise your right hands?
[Witnesses sworn.]
Mr. Platts. Thank you. You may be seated. Let the record
reflect that the witnesses answered in the affirmative.
Our understanding is our floor schedule is we may have
votes around 11 o'clock; and, once we go over, we will be over
there for a long time. So what our goal is is to hear your
statements and then get to an exchange of Q and A so we can
have as productive an exchange here this morning and conclude
when we have to go over for votes so that you are not kept
waiting.
And certainly with you and your staffs as well as with
Members and our staffs, this is kind of, I would say, the
public front of an ongoing effort to work with you previously
and going forward, staff to staff or Members and staff, on this
important issue.
And while we are grateful for all three of you being here,
Mr. Blair and Mr. Easton, I want to especially thank you for
your prior service in uniform. I love what I do, proud of what
I do, but what I do pales in comparison to what you who and all
who have and are wearing the uniform of our Nation's Armed
Services. So, again, thanks for your service.
So, with that, Mr. Easton, if you would like to begin.
STATEMENTS OF MARK EASTON, DEPUTY CHIEF FINANCIAL OFFICER, U.S.
DEPARTMENT OF DEFENSE; DANIEL BLAIR, DEPUTY INSPECTOR GENERAL
FOR AUDITING, U.S. DEPARTMENT OF DEFENSE OFFICE OF INSPECTOR
GENERAL; AND ASIF KHAN, DIRECTOR OF FINANCIAL MANAGEMENT AND
ASSURANCE, GOVERNMENT ACCOUNTABILITY OFFICE
STATEMENT OF MARK EASTON
Mr. Easton. Chairman Platts, Ranking Member Towns, Mr.
Lankford, members of the committee, thank you for the
opportunity to speak with you today on the subject of financial
management within the Department of Defense. I have submitted a
statement for the record which I will summarize briefly this
morning.
As Deputy Chief Financial Officer, I am responsible to our
Chief Financial Officer for financial policy, systems
compliance, and internal controls governing financial and
accounting aspects of our business operations across the
defense enterprise. I have dealt with these matters in various
capacities for more than 38 years, both in uniform and as a
civil servant. I am proud to be part of a financial management
work force that is operating around the world providing mission
support to our warfighters. This team is also solving today's
problems while being called upon to learn new skills and lead
change.
I also recognize that DOD financial management has remained
on the GAO high-risk list since 1995. In my experience, a
reasonable level of control exists across our enterprise,
particularly at the local level, but in my current position I
also see enterprise-wide weaknesses that demand an enterprise-
wide response. The lack of auditable financial statements at
DOD as a whole is a symptom of those weaknesses.
To provide some amount of context for my comments, I want
to cover DOD's financial management goals.
First, we have to, obviously, acquire the resources that we
need to meet national security requirements; and that is our
budget role.
Second, we have to ensure that we are using those resources
legally, effectively, and efficiently. The execution side of
our business--and that is an immense challenge--that is where I
spend my time and energy and where many of the challenges lie.
And the third is to ensure that we have a world-class
financial management work force.
To meet current challenges and to improve financial
information and achieve audit readiness, we have adopted a new
approach with the team that we have in 2009. We feel that that
approach unites the enterprise around financial and asset
information that we use every day to manage, specifically,
budgetary information and the physical existence and
completeness of property.
Previous DOD teams have tried but with limited success. So
it is fair to ask, why will this time be different? Simply put,
we feel we have the right strategy, we have dedicated
resources, we have absolute and solid leadership support and a
governance process that will assign accountability for actions.
2017 is a long time from now, so we recognize that we have to
show specific interim progress; and that is what we are, in
fact, doing.
One test already under way is our audit of the Marine Corps
statement of budgetary resources which we believe will result
in a positive audit opinion. When successful, this will be the
first military service ever to achieve an audit of a single
financial statement.
But there are other events across the Department to include
independent validation on specific things. For example, last
month we completed an examination and validation by an
independent public accountant of our funds distribution and
control process, what we call appropriations received. That
resulted--that segment resulted in a clean opinion.
The Defense Information Systems Agency is in the process of
auditing its fiscal year 2011 books. We expect a clean opinion
in that audit.
This year, our Defense Finance and Accounting Service, our
primary service provider in that regard, conducted an audit of
its civilian pay entitlement system and received a clean
opinion. That system is used not only for defense but for
several non-defense agencies.
And, finally, in July, we began--have not completed but
began an audit of the Air Force's funds voucher Treasury
reconciliation process, an indication that we can reconcile at
least at the transaction level our checking account statement.
These are just a few examples. They build on past
achievements, including auditable financial statements for the
Army Corps of Engineers civil works projects and several
defense agencies.
We also have a number of large trust funds that are
currently auditable, and we will improve as we apply lessons
learned from those recent experiences, as well as getting
feedback from the Government Accountability Office and DOD IG.
And I can assure you this is not the first time that this panel
has met to work on this particular issue.
However, there is an enormous amount of work still to do to
achieve and sustain auditable financial statements. It will
require fundamental changes. The Government Accountability
Office has identified significant specific challenges, and I
wanted to talk to each of those.
The first is leadership or tone from the top. We've
implemented a government structure early in the current
administration, and it has kept the attention of senior
leaders, and it will continue to do so.
Second is work force competency. As I said, we have a
dedicated and professional work force who is on the job, doing
the job, but financial audit competency is one that we need to
continue to emphasize.
Third is information technology. Many of our IT systems are
old, stove-piped, designed to conduct basic budgetary
accounting but not to do the things that we need to do for full
auditability.
Improved systems alone, however, will not eliminate our
weaknesses or guarantee auditable statements. Achieving
auditability requires a consistent--a fourth element--a
consistent level of internal controls, and that may be the key
foundational thing that we put as a priority.
Looking ahead, we are determined to meet the
congressionally mandated deadline of 2017. It is an ambitious
but an achievable goal. However, we think that this time will
be different. We have a Chief Financial Officer in Secretary
Hale who has thoughtfully assessed and applied the lessons
learned of many of those false starts that you alluded to,
while also seeking the advice and counsel of external
stakeholders and oversight activities.
We also have the strong support and commitment of Secretary
Panetta and anticipate an equivalent level of energy and
interest throughout the Department.
Finally, from my perspective, there is clear value and
critical importance in the public confidence that auditability
would demonstrate.
Beyond that, the benefits to the Department, its mission,
and to the taxpayers is very clear to me. This effort is
consistent with the administration's overall campaign to reduce
waste across the government. The American people have always
supported our men and women in uniform, but that does not
relieve us from the obligation to ensure that we are managing
scarce resources carefully and effectively. We are committed to
doing so. This commitment will be especially helpful in
reinforcing our current efforts to combat improper payments. We
have a solid program, but our quarterly results are questioned
because of the many weaknesses that have been discussed.
In summary, we recognize the challenges associated with
improving financial management in the Department. To meet those
challenges we've developed promising partnerships across the
enterprise to include our new chief management officers as
well. We have implemented a new, focused approach that includes
near-term goals in addition to the long-term goal of achieving
auditable financial statements by 2017.
Mr. Chairman, this concludes my statement. I appreciate
your comments and support for our men and women in uniform, and
I look forward to your questions.
[The prepared statement of Mr. Easton follows:]
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Mr. Platts. Thank you, Mr. Easton.
Mr. Blair.
STATEMENT OF DANIEL BLAIR
Mr. Blair. Chairman Platts, Ranking Member Towns, and Mr.
Lankford, good morning and thank you for the opportunity to
appear today before you on behalf of the DOD IG to discuss
financial management challenges facing the Department.
These challenges prevent DOD from collecting and reporting
financial information that is accurate, reliable, and readily
available for decisionmakers. Over the past few years, the
Department has worked diligently to address its financial
management challenges. However, more progress is required to be
good stewards of the taxpayers' money.
Today, I will discuss three key challenges that must be
addressed before DOD will be able to demonstrate sound
financial management through a financial statement audit:
first, improving data reliability; second, improving internal
controls; and, third, effectively implementing new systems
called Enterprise Resource Planning systems [ERPs.]
Reliable data are essential to making sound business
decisions. However, we frequently identify financial data that
are inaccurate and unreliable. Since fiscal year 2007 we have
issued 89 reports that highlight data quality problems. Our
audit of the controls over the Army's deployable disbursement
system, which contains key information for $13 billion of
commercial payments, found that the system did not have
reliable data for over 73 percent of the transactions that we
reviewed.
Significant improvements must also be made in DOD's
internal controls. As you know, these controls are the first
line of defense to safeguard assets against fraud, waste, and
abuse. Currently, longstanding internal control weaknesses are
affecting the Department's ability to obtain a clean audit
opinion. In addition, without strong internal controls, the
Department is at high risk of making improper payments.
In fiscal year 2010, the Department reported nearly $1
billion in estimated improper payments. However, DOD's
estimation process did not review more than half of the first
quarter of fiscal year 2010 gross outlays; and, therefore, we
question the reliability of this estimate. Simply stated, the
Department does not consistently know that it is paying the
right person the right amount at the right time.
Our audit of the contracts supporting the Broad Area
Maritime Surveillance Program found that the DOD personnel did
not validate that the contractor was entitled to receive over
$329 million because none of the invoices were reviewed. My
written statement for the record includes copies of two actual
invoices that were paid under this contract.
Effectively implementing the Department's new ERP systems
is a key component of its auditability strategy. These new
systems are intended to eliminate many old legacy systems,
provide useful, timely, and complete financial management data.
However, unless the Department first improves its data quality
and reengineers its underlying business practices, many of the
intended benefits of these new systems, estimated to cost over
$9 billion between fiscal years 2010 and 2017, will not be
realized.
We've also noted that the milestones for 4 of the 11 ERP
systems has begun to slip.
Further, we are concerned that other milestones for
completing critical financial management improvement efforts
are very close to the fiscal year 2017 deadline. Full
deployment of some ERPs, as well as asserting audit readiness
of the statement of budgetary resources, will not happen until
fiscal year 2017, as some critical components will also not be
validated prior to this date. Any delay in these milestones
will likely prevent the Department from meeting its goal.
In closing, sound financial management is critical to
providing effective stewardship over the billions of dollars
that the Department receives annually. DOD must continue to
improve data quality and its internal controls in order to
reduce its vulnerability to improper payments.
While I recognize the significant effort that DOD
leadership has put forth to resolve these longstanding
financial management problems, frankly, much more remains to be
done. Senior leaders in the Department and the Congress need
reliable, timely financial information in order to make
accurate decisions and to ensure that every dollar spent
actually supports the warfighter and improves military
readiness.
This concludes my statement today. I'd be happy to take any
questions that you may have for me.
[The prepared statement of Mr. Blair follows:]
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Mr. Platts. Thank you, Mr. Blair.
Mr. Khan.
STATEMENT OF ASIF KHAN
Mr. Khan. Chairman Platts, Ranking Member Towns, and Mr.
Lankford, good morning. Thank you for having me here. It is a
pleasure to be here to discuss DOD financial management and
some of the issues they are facing in terms of getting
auditable.
At the outset, I would like to thank you for holding this
hearing. Focused attention is necessary to be able to solve
these challenges.
In my testimony today, I will discuss the status of DOD
financial management weaknesses and its effort to resolve them,
the challenges DOD continues to face improving its financial
management operations. My testimony is based on our prior work
at DOD.
Regarding the status, for more than a decade, Congressman
Platts, you mentioned, DOD has dominated GAO's list of programs
and operations at high-risk due to their vulnerability to
waste, fraud, and abuse and mismanagement. In the last 20
years, as a result of significant financial management
weaknesses, none of the DOD military services--the Army, Navy,
or the Air Force--have been able to prepare auditable financial
statements.
DOD's past strategies for improving financial management
have generally been ineffective, but recent initiatives are
encouraging. Changes to DOD's plan, the Financial Management
Improvement and Audit Readiness plan, the FIAR plan, if
implemented effectively could result in improved financial
management and progress toward auditability.
DOD faces many difficult challenges in overcoming its
longstanding financial management weaknesses. I will highlight
five of these significant challenges.
First, one of the toughest challenges is sustaining
committed leadership. DOD's Comptroller has expressed
commitment to the FIAR goals and has established a focused
approach to achieving long-term goals that, if implemented
correctly, will include interim goals to provide the
opportunity for near-term successes on the way to long-term
goals. However, within every administration--and, of course,
between administrations--there are changes in senior
leadership. Therefore, it is paramount for the FIAR plan and
other current initiatives to be institutionalized at all
working levels within DOD.
Second, weaknesses in DOD's internal controls over
financial management are pervasive and a primary factor in the
Department's inability to become auditable. DOD has efforts
under way to address known internal control weaknesses.
However, their effectiveness has not yet been seen. As
discussed in our recent report, because of the lack of
effective internal controls, the DOD Inspector General
disclaimed the opinion of the Marine Corps' fiscal year 2010
Statement of Budgetary Resources, the SBR.
The third challenge I want to cover is a competent
financial management work force. With the right skills and
knowledge to implement the FIAR plan, analyzing the skills
needed and building and retaining such work force are important
actions now to ensure continued progress in implementing the
goals of the FIAR plan.
The fourth challenge is to assure accountability and
effective oversight. To improve efforts, DOD and its components
have established senior executive committees and designated
officials at appropriate levels to oversee financial
improvement. It will be critical for senior leadership at each
DOD component to ensure that responsible officials are held
accountable to their component's progress. We recently reported
that Navy and the Air Force oversight of their implementation
plans was not effective, resulting in their incorrectly
asserting that they were ready for audit. Both the DOD IG and
the Comptroller made the final decision correctly to determine
the plans were not ready.
Fifth, Enterprise Resource Planning [ERP], systems are
expected to form a core of business information systems in DOD
components. According to DOD, their successful implementation
is not only critical for addressing long-term weaknesses in
financial management but equally important for helping to
resolve weaknesses in other high-risk areas such as business
transformation, business system modernization, and supply chain
management.
The components, however, have largely been unable to
implement ERPs that deliver the needed capabilities on schedule
and within budget. In a preliminary result from a current
review, we identified issues related to ERPs deployed to DFAS,
the Defense Finance and Accounting Services, by the Army and
the Air Force. DFAS users of the ERP told me they needed to
devise manual workarounds and software applications to perform
routine tasks. To the degree that ERPs do not provide intended
capabilities, the goal of DOD-wide audit readiness by fiscal
year 2017 could be in jeopardy.
In closing, I am encouraged by the recent efforts and
commitment DOD leaders have shown toward improving the
Department's financial management. However, DOD continues to
face significant challenges; and success may depend on DOD's
ability to sustain and increase its current efforts,
commitments, and momentum. Congressional oversight will play an
indispensable role in assuming continued progress, and I
commend you for holding this hearing.
Mr. Chairman, this concludes my statement. I'll be happy to
answer any questions that you or the other Members may have.
Thank you.
[The prepared statement of Mr. Kahn follows:]
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Mr. Platts. Thank you, Mr. Khan.
We will move into questions, and I yield myself 5 minutes
to begin.
Just a statement up front, Mr. Easton. Your written
statement and you said here today something that jumped out to
me as a quote: ``Why will this time be different?'' And I think
that is something the ranking member and I, because of for
almost 10 years being involved in these issues, your
acknowledgment that--you know, we've heard some good,
encouraging words in the past. I have seen, as with DIMHRS,
over $1 billion spent on the issue. Yet, here we are still
struggling to move forward--and I'll get into it if we have
time a little later--have one branch already saying 6 years out
they don't think they can meet the deadline, which that does
concern me also from a leadership standpoint that they are
saying that, you know, hey, we saved the world in World War II
in 4 years; yet we can't, you know, get our books straight in
another 6 years.
But I want to start with, first, the importance of this
issue and why it is so important. You know, our hearings are
not sexy, glamorous, exciting hearings, but they are so
important because they are about the American people's money,
how it is being handled and, in this case, how we make sure
those funds are available for the warfighter.
Senator Coburn put out earlier this year a report on
deficit reduction entitled, ``Back in Black,'' and he
referenced in there that the Marine Corps, through improved
financial management, had saved an estimate about $3 for every
$1--$3 savings for every $1 they spent on those improvements.
Across the government, it actually seems to be about $10 to $1
savings. So, if we extrapolate that, we are talking probably at
least $25 billion or more in annual savings in just the
Department of Defense; and given that we are moving through
cuts of over $400 billion to the Department in the coming 10
years and perhaps further cuts as part of the Budget Control
Act, these type of savings are critically important.
I guess, Mr. Easton, I would ask you, do you think that
Senator Coburn's number of at least $3 to $1 savings and
perhaps as high as $10 to $1 is a legitimate number when we
talk about what we may be able to save if we are successful in
this effort?
Mr. Easton. I'd be reluctant to specifically commit to a
number. I think that there is clearly value in the importance
of doing this.
For example, the Marine Corps has already demonstrated out-
of-pocket costs relative to reducing their bill for finance and
accounting services. I think that there has been identified in
their business practices where they've become aware of how to
use that information in a more timely manner to ensure that
they can do that. So I am absolutely confident that the value
is there.
I would be reluctant--as I said before, I try to stay on
the financial execution side of the house, but that value
proposition I think internally is one that we need to look very
seriously at and act upon.
Mr. Platts. And even if it is half of that estimate and it
is $10 to $15 billion in today's--in any economy, in any time,
that is real money. It is the people's money and especially in
a tight economy and where we have, you know, trillion dollar
plus deficits each and every year now.
Mr. Easton. Absolutely, yes, sir.
Mr. Platts. Mr. Blair, I want to, again, kind of start more
of the big picture. The FIAR, the Financial Improvement Audit
Readiness, plan is so critical here and kind of the game plan
of how do we get to, you know, a clean audit 2017.
Given that, I was I guess discouraged by reports from GAO
that--and I think Mr. Khan just referenced Navy and Air Force--
in at least two of the financial improvement plans that they've
looked at were done not in compliance with the guidelines of
FIAR; and not only were they not done in compliance with the
guidelines which, again, are the critical game plan here, but
the oversight that was put in place to try and make sure the
compliance occurred, the oversight didn't occur from what GAO's
report finds. So from your perspective as IG and then, Mr.
Easton, yours as well, that is not encouraging. Am I missing
something here or are we off to not a good step in this area,
given the failure to comply with the FIAR guidelines?
Mr. Blair. Mr. Platts, I think that the key point here is
the oversight that we provided over those FIAR package--FIAR
assertion packages, it correctly concluded that the Department
wasn't ready. We found in some situations that the Department's
initiatives to review their business processes identified areas
that need to be corrected. Those corrective actions hadn't been
implemented. Yet the assertions continued to move forward, and
the Department continues to say we are audit ready. And so I
think we appropriately stepped in and said, stop, we don't
think you are ready.
And I think what is happening now is that there is a
learning process going on. And the Department's actually taking
the results of its own review processes, the feedback that we
give them, they are taking it very seriously, and they are now
looking at what further improvements do we need to make before
we come back and say, yes, we are ready for an audit.
Mr. Platts. And, Mr. Easton, maybe that is--if you can
touch on what Mr. Blair just said, given that these are kind of
early ones that were identified as challenges or problems, how
do we make sure and are we taking proactive steps that the
lessons of those FIPS--not being compliant, not being properly
handled, moving forward anyway--that we don't continue to
repeat those errors? Because, if we do, 2017, 2027, we will be
here and--I have already got a lot of gray hair, but more gray
hair--and still be talking the same issues. So how do we learn
from those mistakes and not repeat them?
Mr. Easton. We spend a lot of time in terms of trying to
cross-fertilize, both at a senior level from a governance
perspective as well as a working level, to be able to learn
from what we found from the Marine Corps audit, learn from
those packages. In both of those packages, the GAO identified
we had, in fact, as Dan said, basically said you are not ready.
And so I think that what we are trying to do now, it goes
back to the--a little bit of a competency issue. And I say
competent meaning our people are some of the best people in
government--I can assure you of that--but, at the same time,
from a financial audit perspective, we don't have those skill-
sets. We are not viewing it in the way that a financial audit
needs to view it and that management needs to view it.
So we are trying to be able to get in as early on in those
things to be able to sort of mortarboard this up front to make
sure that they are going to go into those process and apply the
lessons up front. So that is what we are doing in that regard.
Mr. Platts. I want to yield to the ranking member but a
quick follow up.
I know you've put in place in essence a certification
program to try to get your financial management personnel more
up to speed, I'll say. Is this going to be part of that, you
know, that they understand the role that the FIAR compliance,
you know, the guidelines play and that, as they move forward,
they need to be looking to make sure they are in line with it?
Mr. Easton. That is absolutely one of the key components. I
guess the two things--the two real key things in the
certification program we want to emphasize, this is one of
them, to ensure that the quality of the information is good,
and the second is analytical skills so that we can get the most
out of the program; and so we will be including that.
Mr. Platts. Okay. Thank you.
I yield to the gentleman from New York.
Mr. Towns. Thank you very much, Mr. Chairman.
You know, I want you just to elaborate a little further,
Mr. Easton, as to why this time is going to be different. I
want to hear more about that.
Mr. Easton. I think that what we have done in the past,
because I have been involved--this is sort of a second career
opportunity for me. Having been in the Department of Defense
for 38 years, I spent most of my time in the logistics
community, and so I was an operator. And as I got into the
financial management community, one of the things that I found
is that I had a much different perspective of what I thought
financial--the quality of our financial information when I was
in the logistics community, than when I was working in the
financial management community.
So the key issue that I would like to use, using that as an
example, you know, we have been trying to tackle this too much
in the past as a financial management issue. It really reflects
a weakness in our business enterprise. And so every contracting
officer, every logistics officer, every personnel officer needs
to understand how they do their job affects money and financial
information. And so in focusing on the information that we all
can agree upon, typically budgetary information and logistics
property, I think we are trying to bring those communities
together. And so I would characterize that as our primary
weakness in past attempts, and that is why I think that this
strategy will work.
Mr. Towns. Thank you very much.
Because I want you to know that this is not one of those
``I got you'' committees. This is one of those ``I want to help
you'' committees. So that is the reason why we keep staying
with this and seeing in terms of what we might be able to do.
However, it is encouraging that, you know, President Obama and
Secretary Panetta have singled out financial management
improvement as a top priority at the Department of Defense.
To quote the Secretary: ``It is unacceptable to me that the
Department of Defense cannot produce a financial statement that
passes all financial audit standards.'' That will change, he
said: ``I have directed that this requirement be put in place
as soon as possible. America deserves nothing less.''
As long as leadership remains engaged, I can see this
process going forward. Unfortunately, however, within every
administration there are changes in senior leadership--and I am
happy to hear that you've been around for 38 years, happy to
hear that--which interrupts their involvement in financial
improvement initiatives. Sometimes the interruptions are severe
enough to derail the entire process.
GAO recommends that current initiatives be
institutionalized throughout the Department at all working
levels. In order for success to be achieved--and I want to go
to you, Mr. Khan. Since this is your recommendation, please
explain how you institutionalize financial management
improvement so that it withstands changes at the senior level,
who comes or who goes, that, regardless, that this will
continue to move forward.
Mr. Khan. Mr. Towns, that also touches upon oversight and
accountability. That is going to go a long way to help
institutionalize the tenets of the FIAR plan and buttressing
the financial management within DOD.
Like we had mentioned in our report, one of the issues with
the oversight of the two accessible units at the Navy civilian
pay and the Air Force existence and completeness was that the
oversight and responsibility at ground level, there was not
really adequate acknowledgment that they were not really
following the FIAR guidance. Once the oversight and the
responsibilities are firmly institutionalized, there will be
much more of check and balances within the government structure
to make sure that things are not moving forward unless they are
actually being done.
Mr. Towns. Let me ask you this. Do you think that the staff
that is in place are really capable of carrying out this
mission?
You know, sometimes we ask people to do things that they
just can't do. And based on our own salary scale we watched
that over at the SEC, that when we had people who were making
very little money and competing with people that were making
tons of money, and, of course, the stability in terms of the
work force was not good because people would stay a little
while and then leave. Do you see this as being a part of this
as well?
Mr. Khan. Like I mentioned in my testimony, competency of
the financial management work force is very important for two
reasons. DOD financial management is complex from a technical
perspective. Working in those integrated systems is not easy.
DOD is a complicated environment. So, therefore, training,
getting the right skill-sets to be able to address the current
challenges is critical.
I mean, we haven't done specific work on the competency of
the skill-sets. However, there was a requirement from the
National Defense Authorization Act of 2008 for DOD to go and do
skill-set assessments under many different functions, financial
management being one of them, and that is an area which was not
done. And I think it is being repeated again in the National
Defense Authorization Act of 2011, that they go back and
address the financial management skill-set issue. That is going
to go a long way to answer the question that you have, sir.
Mr. Towns. Mr. Chairman, I know my time has expired, but
let me--I guess to you, Mr. Easton. You know, when we stopped
the draft, we had to create a bonus situation to be able to
keep certain folks in the military that we need for these
essential kind of jobs. Do you think that maybe we need to do
something like that here to hold people that we need and that
can help us with some kind of bonus program or something?
Because, you know, this bothers me, the fact that, you know, we
don't know how much money--and I am looking at this voucher
here. I mean, this is very disturbing.
I'd like you to answer that, but my time has expired.
Mr. Easton. If I could redirect, I guess several of those
things, in my estimation, tie together. I think that the key to
really institutionalizing this is people, as you mentioned. I
think we absolutely have the capability in our people to be
able to do this.
I think that we need to ensure that we are not just talking
at the senior level. We need to begin to institutionalize this
by ensuring that, on the one hand, we are bringing people with
the skill-sets in from the private sector. That is one thing
that we are doing. I think that we need to factor this into the
training programs.
There may be some opportunities to use bonus, things like
that, but, at the same time--you know, we were at another
session, and Congressman Conaway mentioned that he was in the
field and a soldier--I think had mentioned that he's getting
the word.
And so, you know, we need to, through training, we need
through communication, be able to get the word so we are not--
this is not just a Pentagon program. This is a program that has
to be driven into the field. I think the institutionalization,
as well as the leadership perspective, but we really have to
get the word out. It has to become part of our DNA and culture
in DOD.
Mr. Platts. Gentleman from Oklahoma, Mr. Lankford.
Mr. Lankford. Thank you, Mr. Chairman.
Thanks, y'all, for being here. I am sure this is your
favorite part of the week. You've been looking forward to it
all week, thinking I can't wait until Friday, I am going to do
a congressional committee. And I appreciate your work and your
service and for staying on top of this. You've probably spent a
lot of time in a quiet office digging through financials and
trying to track these things. So I appreciate your work on it.
You men know, we have the finest military in the world. No
one does it better than us. No one's ever done it as good as we
do it. We can park a satellite on the horizon and look through
a tent and tell you exactly what is in it, but we can't track
our finances. That is a focus on leadership, and I have
appreciated everyone mentioning. It is just this consistent
focus of, if we are going to do get this done, we've got to
focus on this and get this done.
I do commend the President and I do commend Leon Panetta
coming in and saying this has to be a focused priority. You all
are saying exactly the same things. So I appreciate that. It is
a focused leadership to be able to get this thing accomplished.
I do want to get a chance to ask a couple of specific
questions, though.
Mr. Easton, you mentioned financial controls--in fact, all
of you at some point mentioned something about financial
controls. Give me some specific ideas that you are looking at
at this point to saying we can improve financial controls by
doing these things, so you have specific things already on the
radar for that.
Mr. Easton. We are going at the key processes. I mean,
civilian pay--I mean something as simple as civilian pay where
we look at and identify key controls. We try to standardize the
processes as much as we can, but we identify key controls that,
even if the time and attendance systems may be different, we
have people thinking the same way to be able to implement key
controls and be able to use them as well. Having a control is
one thing but actually being able to do that. So civilian pay,
military pay, and the procure-to-pay process, how we write
contracts, and some of the issues that Dan mentioned in terms
of the contracting process.
This is really a team sport. It is not just a financial
issue. It is an issue of how we write contracts, how we
administer contracts and keeping the focus on those controls
throughout the process.
Those are a couple of examples that I would offer, and so
it really is pretty basic, and it amounts to doing your job on
a day-in-and-day-out basis.
Mr. Lankford. It is training the people. It is knowing what
is the job, what is the task, and training people for that. And
that is why it is challenging for me to look at and say, 6
years out, there is still some hesitancy to say can we get
there in 6 years when it is the basics of defining out what the
job is and training people to be able to do a job.
Mr. Easton. And I think--and several people mentioned the
Air Force as a high risk--identified some concerns with risk. I
think that they link--and it is important to link the
investment in our systems to this process as well, but getting
back to the basics I think is something that we can do that
will support this as well as to increase the likelihood that we
will successfully do that system. We have had a problem in the
past where we tend to look for a silver bullet, and when we
look in the mirror, I think it is just a question of doing the
basics well.
Mr. Lankford. Okay. Other comments about dealing with
financial controls, specific ideas on that, what has to be
done?
Mr. Blair. Mr. Lankford, I just want to leverage a little
bit more on what Mr. Easton just said.
Really, financial management goes way beyond the
traditional bean counters. If you look at how the Department
executes a lot of its missions, it is done primarily through
contracts; and one of the things that is a consistent theme in
my testimony is a lack of effective contract oversight,
effective contract administration. When so much of your money
is going out that way and you don't have a good process in
place to review all the vouchers and you don't have good edit
checks in your systems to make sure that everything is done
efficiently, those are two areas that I think the Department
could significantly benefit from.
Mr. Lankford. Is that the training of the contracting
officer or is that training of the person that is next after
the contracting officer? Where is the gap there?
Mr. Blair. Sir, the gap is in both locations. It is the
contract officer level when it comes to putting the contract in
place, but it is also the contracting officer's representative
who is the person on the ground who is supposed to be doing
that oversight.
Mr. Lankford. Because we've had, obviously, numerous issues
with a contracting officer writing out a contract, putting it
out there, and then, as we go along, then the definitions
change and the price skyrockets as the definitions of what we
are really looking for change. So we really didn't get a good
definition at the beginning.
And I am quite confident many of these systems are very
complicated and it is hard to get it right the first time when
things--as we go along. But it is also difficult when everyone
as you go along says, oh, I'd like to also add this and we
thought about this and can we change this. So is that a matter
of getting contracting right at the beginning, I say again? Is
that the bigger of the two issues or is the bigger issue the
person that is behind it?
Mr. Blair. I don't think you can look at one as being
bigger than the other.
Mr. Lankford. Okay.
Mr. Blair. I think they are both equally important. The
requirements have to be correct in the beginning, and the
oversight throughout the contract process has to be effective.
Mr. Lankford. Okay. Mr. Khan.
Mr. Khan. Just to add to what Mr. Easton and Mr. Blair have
mentioned, I think it is very important to have a baseline of
all the internal control deficiencies currently to be able to
build on; and, second, just like Mr. Blair has just mentioned--
--
Mr. Lankford. I am sorry to interrupt. Is the baseline--
does a baseline like that exist?
Mr. Khan. Not that we know of.
Mr. Lankford. Okay. So, at this point, part of the issue is
just writing out where do we have the problems?
Mr. Khan. Absolutely, and that is part of the--one of the
basic FIAR plan tenets, that they have to do the discovery
process. So that----
Mr. Lankford. We are set to have that part of the process
complete by when? Obviously, getting the full list of where we
have problems precedes solving problems.
Mr. Easton. I think that we go through the discovery
process. But in each of the segments--I mean, I think in many
cases each of the components focusing on that have broken it up
into segments and so those processes may take place at various
times.
I guess I would emphasize, too, it is a process of really
looking in the mirror and finding out how you are doing
business today. I would assert that we have more control than
we are willing to present, and it is a question of stepping
back and looking at how we do business. And I can give you some
examples in that regard, but we clearly have to do that.
Mr. Lankford. Okay. Thank you.
Mr. Khan, go ahead.
Mr. Khan. Just to add to that, just like Mr. Easton and Mr.
Blair have mentioned, I mean, many of these transactions
originate in nonfinancial areas. Therefore, it is critical--the
systems are going to be critical. The sooner they are
implemented, this end-to-end process off a particular
transaction cycle is going to be put into place. Controls are
going to change along with the new system. So the sooner these
systems are implemented, the better it is going to be, and it
is going to go a long way to addressing the control weaknesses
that we have right now.
Mr. Lankford. Okay. Thank you. Gentlemen, I appreciate that
very much.
Mr. Chairman, I appreciate your patience with me going a
little bit long.
Mr. Platts. No problem, and we are--because we still
haven't had any vote bells go off, we are going to continue for
my colleagues who--if your times allow, have a second round if
you like. I am going to kick it off.
Before a question on a specific issue of improper payments,
Mr. Easton, you mentioned in your testimony and Secretary
Panetta taking a very hands-on approach to this, the importance
of financial management and improvement, and you referenced
that you are kind of preparing an update for him, where things
stand and what your plans are, maybe similar to what you are
sharing here today. But I guess, what is the timeframe for that
to be provided? And if it is possible for a copy or a summation
of what those plans are, if it is possible to have it shared
with the committee as well, I think it would help us as we try
to partner with you so we are all on the same page.
Mr. Easton. Absolutely. We are in the process. Secretary
Panetta and Mr. Hill are reviewing our current status and
plans, much of the same things that we've talked about today,
and so we would anticipate--I don't want to get out too far in
front of my boss or his boss, but we would certainly want to
share those with you and the committee.
Mr. Platts. That would be great. Thank you.
I want to turn to the specific issue of improper payments.
You know, across the government, the official number, most
recent, is $125 billion of improper--when I share that number
back home, my fellow citizens think I misspoke, that every year
we are making improper payments of at least that. We think the
real number is probably at least $200 billion, because we don't
account for maybe every improper payment made.
When it comes to DOD, I know, Mr. Easton, you I think
reference a 1 to 2 percent rate, which, even in comparison,
that would be a good percent, but given we are talking $550
billion, that would still be billions of dollars of improper
payments within the one department. But I guess what I want to
is--Mr. Easton, you highlight that as a strength of where you
are doing well.
Mr. Blair, Mr. Khan, IG GAO raise some specific concerns
that there is not a real ability to accurately assess if that
is the right amount, 1 to 2 percent, and specifically that
there are hundreds of billions in outlays that were not
assessed at all. And so how do we know what the real number is?
So I guess, Mr. Easton, we can start with you. How you
think you come up with your number of that 1 to 2 percent; and
then, Mr. Blair and Mr. Khan, if you could reference your
concerns and where you differ here.
Mr. Easton. We have about six major programs. DFAS, our
finance and accounting operation, disburses about 90 percent of
our dollars. So there is five or six primary programs that they
report upon as well. Many of our payments--many of our payments
are recurring payroll-related payments, contract payments.
Admittedly, some of them are very, very complex.
The two areas of difference--I mean, I have to acknowledge
the fact that, lacking a clean audit opinion, lacking and
acknowledging comprehensive controls, there are weaknesses. I
would say that we try to compensate for those weaknesses to the
maximum extent possible and report accurately in each of those
numbers, and that is why I consider it a strength.
However, the two areas of difference, just to mention two,
is in the commercial pay area because of the difficulty--and,
you know, we put so much emphasis in prepayment audits. We had
not moved into a statistical sampling, and a lot of your $125
billion is driven by legitimate statistical sampling. That was
the point GAO has brought up with us at the time. OMB was on
board with our approach. We've since changed that. So we've
closed that one particular gap.
The issue relative to the DOD IG report--and Mr. Blair will
comment more on that--was there was about a hundred and--I want
to say $130 billion, I believe, that were not included. Much of
that number represented a transfer payment into a trust fund,
and their point was accurate. In other words, we should be able
to reconcile all outlays, but some of the outlays that were
considered technically excluded then were not intended to be
included. It was a difference of opinion, admittedly, between
us and the IG.
Mr. Platts. Mr. Blair.
Mr. Blair. Mr. Easton's correct that we do differ on some
of these issues. There are some areas where the Department did
not do a very good analysis or did not do an analysis at all
and really focused a lot in the contract and commercial
payments areas; and, as I indicated before, that is where so
much of the Department's dollars are going.
With regards to the transfer--was it a transfer, was it not
a transfer--what we said to the Comptroller staff is, you know,
we'd like to see a reconciliation so that you can show us what
was a transfer, what was a real disbursement or a payment of a
bill that was owed.
And one of the things that we wanted to do with our report
was to say here are some ideas that we think you can
incorporate in your next estimate methodology. The results of
DCAA's audit, the results of our audits, those oftentimes point
to areas where vulnerabilities exist.
The other thing that the Department can do is expand its
methodology to look at the instances where they offset a future
contract payment because of a prior improper payment or
overpayment amount to include the results of when EFTs,
electronic fund transfers, are rejected because it went to the
wrong place. That is another indication that it is an improper
payment.
Also, to look at where there are recalls. A recall is a
situation where the Department can go in and take the money
back out of the bank account.
All of those are specific areas that weren't included, that
if they were included would help develop a more robust
methodology; and, as I indicated before, you don't know unless
you look. And so the more introspections that the Department
has, the better they are going to be able to improve their
controls.
Mr. Platts. Mr. Khan, before you answer, if you want to--
what you have to share, and specifically I know in 2009 GAO
made I think 13 specific recommendations on this issue that
maybe overlap or complement what Mr. Blair just referenced.
Where do you think we are on those 13 specific recommendations
and which, if any, that have not been followed that are most
important that we've talked about?
Mr. Khan. Congressman Platts, I will get you the specifics
on the 13 recommendations for the record, though.
But just to add to what Mr. Easton and Mr. Blair have
mentioned, our main concern is, again, that not all the
transactions, especially about commercial pay, were included in
the risk assessment calculation for internal--for improper
payments.
Also, improper payments is an area which is self-reported;
and, given the control environment within DOD itself, it may
not be a complete number. Like we testified yesterday, that
funds control and payments control is an issue that GAO is
concerned about the completeness of the reporting of the anti-
deficiency violations and the improper payments. So the lack of
controls may not provide a complete picture to the officials
within DOD from which they are reporting.
Mr. Platts. The question--I mean, the fact that we have
improper payments at all and especially billions of dollars
goes to the internal control issue. Years back when we created
the Department of Homeland Security, this subcommittee, Mr.
Towns and I, worked and we pushed through an actual audit on
their internal controls to try to get bedrock in that new
department so then we could--the feedback we've gotten from the
Department is that was great for them because it really got
them a good place to then build on.
I know the challenge would be dramatically greater here
with the budget, you know, probably 13 times or so DHS's. So is
it unrealistic of that type of approach here or some variation
to try to get the bedrock on the internal control issue that
relates to improper payments and, you know, ultimately to that
clean audit?
Mr. Easton. One of the areas that I think that I can point
to in the past that have indicated why we haven't made progress
is that we've looked at it from just a financial management
perspective, and we've looked at it in narrow slices. What
we've tried to do is to integrate internal controls,
particularly internal controls of our financial reporting, into
this plan. So we are trying to do, as part of this plan, do
this. So we are not going to go after--just after improper
payments or improper disbursements. We need to go after a good
foundation to be able to buildupon. So I think that we are
trying to do that.
Mr. Platts. I mean, because, if you get there, that
addresses the improper payments as well as giving you time-
sensitive information, you know, as far as how you manage the
resources, how you shift them between priorities, and so there
is a whole host of benefits, including improper payments.
Mr. Easton. Absolutely, and we are trying to--there is a
couple of paradigms that I think that we are trying to shift
and teach ourselves. You know, one is the difference between
positive assurance and negative assurance, and both of these
gentlemen have taught me well over the last several years is
what we seek is positive assurance, to be able to say this is
why management is confident. And then because problems will
happen in an enterprise as large as the Department of Defense,
but, at the same time, a sound basis of internal controls
increases the likelihood that we will find a problem and deal
with it quickly, but it also increases the credibility of those
admittedly self-reported numbers.
Mr. Platts. Okay. Mr. Towns, I yield to you.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me ask, is the problem that you have not been able to
make a decision whether you want to use more outside auditors
and/or to hire inside folks to be able to do--I mean, because
when I look at the fact that you have these 2,200 different
systems, I mean, is that part of the problem? I am trying to
figure out how we get past that or what precipitated it.
Mr. Easton. I think that we--I like to think of this as
Henry Ford waking up. You know, he was managing Ford Motor Co.
out of his pocket as an individual proprietorship, with no
requirement to get a clean opinion, and then all of the sudden
he's a multinational corporation. We have evolved over many
years, and so the systems that have evolved, many of the
systems--we don't have nearly that many financial systems, but
we have that many systems feeding our financial numbers.
And so part of this process that will enable us is to
increase--reduce the number of systems, improve the level of
standardization. It will make an audit not only doable but also
affordable. And so that is what we seek to do. I think that we
got there just through evolution more than anything else and
organizationally and growing without a thought process of this,
you know, prior to the CFO Act. But that would be my
assessment, sir.
Mr. Towns. One of the most pressing issues with DOD's
financial management system has been that they are low tech. In
your testimony, you note that many of these systems exchange
information slowly and inaccurately, lack controls, and are
nonstandard. It appears as if you have begun to remedy these
problems by overhauling this system. I am especially encouraged
by your recognition that these systems must be designed with a
holistic rather than a stovepipe approach. Can you describe
what this holistic approach to IT system comprises? What does
that constitute?
Mr. Easton. I think that we would describe that as being
able to develop a framework for how we want to do business.
That framework is embodied in our enterprise architecture, and
this is a relatively new invention. We have begun on this
around 2001.
We have an enterprise architecture that is essentially a
set of end-to-end processes of how we would want to do
business. And so what we are trying to do is to take the
systems that we are investing in, oftentimes an commercial off-
the-shelf system, to ensure that it is complying with that set
of ground rules. That is how we are trying to evolve and be
able to deal with it on a holistic basis.
Mr. Towns. Let me ask this question. Then I am going to
yield back. Is there anything that we can do on this side that
we are not doing that would be helpful?
Mr. Easton. I think----
Mr. Towns. I know you are not going to recommend more
hearings. I understand that.
Mr. Easton. If I did, I think my boss would shoot me.
But I think that sessions like this, your interest is very,
very important; and I think that Mr. Blair and Mr. Khan
mentioned that. That kind of focus I think does, in fact, help
keep us focused.
As I look back, and I mentioned being in the Pentagon in
the mid-'90's, and these kinds of hearings occurred, but they
did not occur with the frequency, the knowledgeable intent, and
focus that we see them occurring now. And, from my perspective,
that is very, very helpful.
Mr. Towns. Mr. Blair.
Thank you, Mr. Easton.
Mr. Blair. I don't want to say that I want to be up here on
a regular basis testifying, but I think the tone from the top
is very important to keeping the pressure on.
Other types of reporting sometimes become helpful tools to
prod the Department to do certain things by certain points in
time, and so you may want to look at some interim reporting
mechanisms to closely track the milestones and where they are
slipping. And I know that there is already some of those
reporting requirements, but I think, between the two of those,
the continued pressure and the tone from the top, as well as
the reporting, along with the sustained leadership the
Department has in place and a sustained consistent direction of
how we are going to fix this problem, I think we are in a
better situation now to see real improvement than we have been
in the past.
Mr. Towns. Mr. Khan.
Mr. Khan. Just to add to what Mr. Blair and Mr. Easton have
said, GAO has highlighted that oversight and investment
management in IT projects or ERP implementation is essential.
By that I mean that when the ERPs are being implemented and
moving to a next phase, there should be more questions asked
that the ERP is meeting the intended functionality.
Like I mentioned in my testimony, many of the ERPs have
slipped their timing or their timelines because they were not
meeting their functionalities. So strengthening the oversight
and investment management is critical.
Though we are seeing positive signs, and one of the ones,
if I may highlight, is the milestone decision authority
recently precluded DEANS, which is the Air Force general ledger
system, from being deployed further from the Scotts Air Force
Base until some of their implementation problems were
addressed. So we are seeing some positive signs, but that is a
critical area where they need to strengthen.
Mr. Towns. Okay. Thank you.
I yield back, Mr. Chairman.
Mr. Platts. I thank the gentleman.
Mr. Lankford.
Mr. Lankford. Thank you, Mr. Chairman.
Who is kind of living and breathing this all the time? Is
there an individual or a group of individuals? Obviously--
y'all, obviously, live with it a lot. But someone's got to wake
up every morning thinking, how am I going to fix contracting?
How am I going to fix training contracting officers? How are we
going to chase this down? Somebody has to wake up thinking,
when is the last time we went down to the line and talked to
civilian employees about waste? When's the last time I sat down
with a warfighter and said how do we really get receipts back?
When is the last time that we actually sat down with a
contractor and said did this work and getting feedback and
evaluation and gathering those ideas on the ground? Who's kind
of living and breathing that all the time?
Mr. Easton. It takes place at a lot of levels. I guess I
feel like I wake up thinking about it all the time.
Clearly, I have a leader for my FIAR team. I hired him with
experience in financial audit to be able to do that. It really
goes down into the field, and when I visit the field I am,
quite frankly, more encouraged because those kinds of things
are happening, but we need to make sure that they happen within
the context of these kinds of outcomes.
Mr. Lankford. So is there--as far as comparing the
education, for instance, I have heard very high praise on
Veterans Affairs and how they are handling some of the training
of their contracting officers. Is there that kind of
conversation happening agency to agency? Or maybe y'all would
look at it and say, I disagree, I don't think they are doing a
good job either. But y'all may have a different opinion on that
from what I am hearing. But is there that kind of conversation
agency to agency saying how are you training people? It is
something that we are trying to deal with as well the training,
the equipping of the contracting officer.
Mr. Easton. There's forums--I can speak to forums. OMB
sponsors a CFO Council. There is an analogous group for the
acquisition community and the HR community. Oftentimes, it is
important to not only have those conversations across the
functional areas but then within the organizations. Because
these things really do, you know, have to fit together from an
enterprise perspective. But those are--at least that is an
example I could point to.
Mr. Lankford. Okay. Any comments on that?
Mr. Khan. Just to add to that. I mean, it is very important
to look at the financial management within the context of the
business transformation or the enterprise transformation within
DOD itself. So, just like Mr. Blair and Mr. Easton have
mentioned, it has to be a multifunctional approach so that we
avoid some of the silo'd initiatives in the earlier days. So,
consequently, acquisitions--procurement, acquisitions, supply
chain management, infrastructure development all has to be
looked at collectively to be able to address these issues.
Mr. Lankford. Okay. While we are talking back and forth,
too, there were several comments that were made, and Mr. Easton
has a part of his testimony, a section about recovering
improper payments and such. Obviously, that is important when
we discover that is an improper payment to recover. As a part
of this conversation as well how do we prevent those improper
payments ever being done, and how are we doing on the progress
on that?
Mr. Blair. Mr. Lankford, I think that is the key: Don't try
to recover the money once it has gone out the door but try to
prevent it up front. And that is what all the discussion this
morning has been focusing on, internal controls. And when the
Department has a solid set of internal controls that provide
the positive assurance that Mr. Easton referred to earlier,
when that is in place, then the number of improper payments is
going to significantly decline. So it is very important for the
Department to improve this internal control structure first,
rather than to emphasize trying to recover the money after it
has already gone out the door.
Mr. Easton. But I might add that we have emphasized the
prepayment checks. In fact, when GAO came in, that was our
position, is that we would prefer to invest in stopping before,
and I think the GAO position was, well, you should do both. And
that is what we are currently doing with the commercial
payments, but we had a business activity monitoring tool, an
automated tool that was particularly critical because we had
multiple entitlement systems, and so potentially a vendor could
submit--as a weakness, could submit an invoice to two different
systems, and we had to make sure that we were able to address
that, address it before something like that happens, and it has
produced good results.
Mr. Lankford. That is great.
One final question and I'd be glad to be able to yield
back.
We are obviously gearing up for a large-scale single audit
happening 6 years from now, on time, ready to go, well checked,
all those wonderful things. What about 2017, 2018, 2019? Are
the systems and the process and the conversation in place to
say this is not going to be gear up for 20 years to get the
check and then we will do this again 20 years from now? Or are
these systems all gearing up and saying we will be prepared for
an annual check from here on out?
Mr. Easton. I think we certainly understand that this is an
annual routine. This is not--again, from a Department of
Defense cultural perspective, oftentimes you get into--in my
experience in uniform, you get into where you, in one
particular tour, you would experience inspection one time. I
spoke to a group of marines, and as we go through auditing the
Marine Corps statement of budgetary resources, a young marine
raised his hand and said, sir, you mean we have to do this
every year? And the answer is absolutely.
But the key to being able to do it every year and as the
chairman mentioned the sustainability aspect is really based on
the scale we operate systems and strong internal controls. And
so that is what we have to be able to be building now.
Mr. Lankford. Culture change.
Mr. Easton. Absolutely.
Mr. Lankford. Thank you. I yield back.
Mr. Platts. I thank the gentleman.
I yield to the gentleman from Virginia, Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman. Forgive me for being
late. I had an amendment on the floor.
Mr. Easton, Congress first required DOD to audit its
finances in 1997. How much has the DOD budget increased since
1997?
Mr. Easton. I don't have the specific numbers off the top
of my head, but significantly increased, particularly in the
last 10 years since 2001.
Mr. Connolly. Probably doubled, right?
Mr. Easton. Yes, sir.
Mr. Connolly. Plus wars. So, presumably, it is more
imperative than ever, given the huge amounts of money we are
talking about, that, in fact, DOD meet that requirement. Now,
we are talking about extending it to 2017, which means we will
have gone 20 years from the first congressional requirement to
the actual deadline. From a confidence-building point of view,
you think that is a problem for the Department of Defense?
Mr. Easton. I think we know why we are not financially
auditable. I wish that--and, as was mentioned earlier,
Secretary Panetta has publicly said he finds it unacceptable,
as do we. We have a plan, the complexity of what we need to
do--and I venture to say that in 1997 the Department of Defense
did not fully understand what it meant to become financially
auditable. We do now. We have a plan, and I think we are
committed to it. I wish we could deliver it tomorrow, but it
will take time. I think that we are on the right track.
Mr. Connolly. Good. Well, I just--I think on both sides of
the aisle we share the same view that it is imperative that
that be accomplished sooner rather than later in order to make
sure there is public confidence in the vast amounts of money we
are investing in defense.
DOD has 2,200 noninteroperable business management systems,
and I know that Mr. Towns asked a question about this, but what
progress are we achieving on trying to get that number down to
ensure more efficiency and more accountability?
Mr. Easton. We are making significant progress. I think
with each of these--with each of these major systems,
Enterprise Resource Planning systems, there is not just one or
two, but there is tens of--you know, the Navy ERP, for example,
when it was implemented at the Naval Air Systems Command,
eliminated 60 systems. And so we have a significant ways to go,
but we are making progress with each implementation at each
individual activity.
Mr. Connolly. I hope so.
DOD spends more than--given the fact that it has the
largest budget, it spends more than any other Federal agency on
outsourcing contracts. Contract management, especially given
the growth in the budget that we talked about since 1997,
obviously becomes even more important. Can you talk a little
bit about the role of training contract managers and whether
we've looked at ways to create a professional path that is more
attractive and longer lasting so there is continuity built into
large, long-run contracts?
Mr. Easton. The acquisition community has developed--and I
think that under the acquisition work force--has developed a
framework to be able to develop a career pattern to be able to
develop those capabilities.
Quite frankly, within the financial management community,
we are trying to model that under the same kind of thing. But
training and awareness, not only of directly contract
administration but issues associated with the financial
weaknesses associated with the gaps, need to be included in
that training. So I would absolutely agree.
Mr. Connolly. I just--and maybe Mr. Blair and Mr. Khan
wants to comment, but I have just got to tell you, as somebody
who came from the Federal contracting world until I came here,
I can remember one contract, not your agency, in which we had
14 managers in like a 3-year period, no continuity. Everyone
had different expectations of what the contract really meant.
Everyone had the wrong informal ways of changing scope. And,
cumulatively, by the end of the contract, it had radically
changed the nature of the contract. And it is very difficult
for a conscientious contractor to try to provide quality
service when the client, frankly, is so changeable.
Mr. Blair, Mr. Khan, if the chair would indulge, any
comments on the whole contracting piece.
Mr. Blair. Mr. Connolly, I think you've identified a key
part of the Department's business processes that has to
improve. So much of what the Department does on a day-to-day
basis it executes through contracts. Those contracts have to be
well-defined in the beginning, the requirements have to be
well-established in the beginning, and, equally important,
throughout the life of the contract there has to be effective
contract oversight so that the Department actually knows that
it is getting what it pays for. The more improvement the
Department can put in place in the requirements, in the
oversight, the better off we are going to be to know that we
are effectively spending our money.
Mr. Khan. Just to add to what Mr. Blair said, like I had
mentioned earlier on, that a lot of these financial management
or transactions they originate in contracting and procurement.
Therefore, just stepping away a little bit from contractor
training from a contract execution perspective, but it is very
important for the contracting personnel to have the training so
that they enter the financial information correct in the
systems. Because if it is not entered correctly, then
correcting and rectifying it downstream, it is a challenge
without reworking it.
Mr. Connolly. Thank you very much.
Mr. Chairman, I want to thank you for holding a
substantive, non-gotcha hearing which, of course, characterizes
your leadership in this subcommittee.
Mr. Platts. Thank you, Mr. Connolly.
And, as I said earlier, that the issues we deal with,
because accounting and things is not the most exciting but very
important, and your participation, as well as Mr. Lankford and
the ranking member, is much appreciated.
My understanding, we are probably going to have the first
vote go up in 5 to 10 minutes, which means we have a chance to
squeeze in a few more questions and if we could and maybe have
one quick opportunity for each of my colleagues as well to wrap
up, and we will likely follow up with you in writing. A number
of issues, I know we are not going to get to, and that is a
credit to the written statements that you provided, which gave
a lot of good detail, and your testimony here today that gave
us a good ability to have an exchange.
I want to make sure I get in about the issue that has been
mentioned a number of times and the training and the
sustainability and that the systems we put in place--and it
goes to Mr. Lankford--that we don't just have 2017 and, oh, we
are good for 20 years and see what happens. But our goal is
that when we get to 2017 that we have a work force that is
well-trained and fully up to speed and moving forward with the
FIAR guidelines, to have that audit be a clean audit and
thereafter be able to do so. But the other is the systems we
put in place in information technology.
When I first came along to this committee just as a ranking
member--I mean as a member and then became the chair in January
2003, we were in the initial years of DIMHRS, the Defense
Integrated Military Human Resource System, and it was promised
as the savior of how it was going to help us get our hands
around this, you know, personnel human resource systems in
particular and all the expenditures related to it.
Last year, after I think 12 years of expenditures, over $1
billion, it was basically cast aside. Admiral Mullen, Chairman
of the Joint Chiefs, was quoted as saying it is a disaster.
I know there is a draft report that GAO has put out
entitled Information Technology: OMB Needs to Improve Its
Guidance on IT Investments. In that draft report from GAO, it
references that, in the fiscal year 2011 expenditures, that
governmentwide, it is just shy of $79 billion in planned IT
investments, of which almost half of those, $37 billion, are
Defense Department IT investments. And I think if I do my
numbers correctly, maybe two-thirds are operations and
maintenance of existing systems and a third is new investments.
Given the history of DIMHRS and $1 billion of hard-earned
taxpayer funds spent without a good return or perhaps any
return in the end, what are we doing to make sure that the $37
billion we are spending this year, some on existing, some on
new investments, that we've learned the lessons of DIMHRS and
that we are not getting far down the path and saying, you know
what, this isn't going to do what we need to do and we start
over again?
Mr. Easton, if you could take that.
Mr. Easton. We are trying to apply the lessons, and I think
that we are very deliberate, and there is a balance between
holding these programs up and making sure that we are going to
get our money's worth. But DIMHRS is a classic example of
something that we cannot afford to repeat.
And in many cases, we--number one, we are trying to
leverage something from the DIMHRS program. I certainly hope
that we can. I don't know for sure if we will. But in at least
one instance one of the components is stopping to say we are
not sure we need a large system. We are not sure that we can
make, you know, with a smaller investment to be able to get the
capabilities.
It starts with applying the lessons and also ensuring that
the specific problem that we are trying to solve and the
specific functional advocate that is thinking about this all
the time is involved and we don't just put this into a program
and just expect things to happen. And so, you know, we are
trying to apply that in our investment review process to be
able to make sure that that never happens again.
Mr. Platts. In that review process to learn the lessons,
not repeat them, there are issues. When I see a number $37
billion, perhaps maybe a third of which is new investment, are
you also looking at making sure you are not being duplicative
in those investments, that there is across-the-Department
coordination of what you are doing, both that you are not
duplicating efforts and that whatever different efforts are out
there in the end will be able to talk to each other and be
coordinated for the overall assessment?
Mr. Easton. I co-chair an investment review board that
partners with a weapons systems acquisition logistics, and I
think that that makes sense. Because, in many cases, we said
that we spend a lot of money in acquisition and logistics
support functions.
We ask those specific questions. As systems come up to us
for approval, whether it is a legacy system or a system that
has to be modernized, if there is this question of why does the
Air Force have this system and the Navy has the same system to
do the same thing--and we've been able to make some successes,
but, admittedly, that is still--that mindset is that everyone's
special and we are trying to be able to do that and minimize
that investment.
I should say as we go through the current budget process we
are getting a lot of help in terms of reducing the amount of
money that is invested in the business systems, and so we are
going to have to make some hard decisions in that regard as
well.
Mr. Platts. Mr. Blair, as we go forward and have the
lessons of DIMHRS--and I know your office plays a role in
auditing and kind of after the fact but also proactive--what
role does the IG have in looking at those investment decisions,
you know, proactively and prospectively so it is up front that
you can help make sure the lessons learned are applied?
Mr. Blair. One of the things that we have ongoing right now
are several audits of the ERP systems, and we are going to be
starting in fiscal year 2012 doing audits of additional ERP
systems. And it is important to note that these audits are not
tail-end, gotcha-type things you should have done 10 years ago.
What we are really doing, as the systems are being developed
and as they are being rolled out in a staged manner, we are
looking at the current scenario for the system and saying
here's some areas that we think you need to correct before you
roll it out any further.
GFEBS and LMP are two examples of systems where we've done
a lot of audit work, and what I think is encouraging is the
dialog that Mr. Easton and I have had over the past several
weeks, especially on these systems, and how lessons learned can
be taken from those ERPs to the other ERPs that are being
developed so that the information that we are providing to them
on one particular system can then be used to leverage and
improve the rollout of other systems.
Mr. Platts. And, Mr. Khan, GAO I know has done a lot of
work in this area of the investments. Have they done anything
comprehensive that captures how much has been invested in IT in
the broad sense, but specifically DOD, that was not productive
and what the consequences of those failed investments were?
Mr. Khan. Mr. Platts, I mean, we haven't gone down to that
granular level of whether it has been productive or not. We did
do a body of work last year which was focused on 10 business-
related ERPs, and it was of concern. There were cost overruns
and time slippages, and we had made several recommendations.
Like I mentioned early on to Mr. Towns' question, we have
seen some positive signs and we hope to continue to see them in
terms of investment management and milestone decisions.
An example I gave you was the Air Force's general ledger
system where the milestone decision authority had made a
decision to not give them permission to deploy that outside of
Scotts Air Force Base until the current functionality was
addressed. But there needs to be more oversight and hard
questions to be asked before additional funding is given.
Mr. Platts. I am going to wrap up there, because I know
votes are up. Mr. Towns, Mr. Connolly, do you have any other
questions?
Mr. Connolly. I just had one.
Mr. Platts. Just one.
Mr. Connolly. Thank you.
As you know, we bifurcate Federal contracting training
between the Defense Acquisition University and the Federal
Acquisition Institute. Unfortunately, the FAI has only six
employees and nowhere near the capacity to train contracting
staff as needed by non-defense agencies. Do you believe if FAI
could perhaps take some object lessons from how DAU operates
and other opportunities from your point of view perhaps to
scale up FAI in coordination with DAU?
Mr. Easton. I am afraid I'd have to take that for the
record and look into that from an acquisition perspective, and
I'd be glad to do that.
Mr. Connolly. I would welcome that. Thank you, Mr. Easton.
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Mr. Connolly. Mr. Khan, GAO got a point of view about that?
Mr. Khan. I do not. I don't think we have looked at it. I
will take that for the record if there is any work that we have
done.
Mr. Connolly. I would just note for the record that we got
a letter from Dan Gordon from OMB, very strange letter, given
the fact that I am the author of the legislation, try to scale
up FAI, indicating that we really didn't need to do much and we
already were doing a fine job.
That is not true. It is shocking to me that OMB would send
such a letter without at least first consulting with the author
of the legislation. And I can just assure you this Member of
Congress is going to aggressively continue to pursue trying to
scale up FAI so that we have contracting--skilled contracting
managers in place to manage complex, large, often systems-
integration-type contracts for other Federal agencies besides
DOD; and I'd appreciate you taking that word back.
Thank you so much.
Mr. Platts. I thank the gentleman.
There are a whole host of issues that we didn't get to, but
we are going to need to wrap up here, and my understanding from
the ranking member is we have 14 votes. So we will not be
asking you to stay. You would have lunch and dinner and still
be waiting, I think.
One issue in particular that I wanted to put out there is
the Logistics Modernization Program with the Army. One of the
things that jumped out in, Mr. Blair, your testimony about this
program is that implemented I think over $1 billion again
invested; and yet, as you say in your testimony, the system
also did not resolve any of the 10 Army working capital fund
internal control weaknesses.
That is where--while I want to believe you, Mr. Easton,
that--why should we, you know, this time think, hey, we are
going to get it right? When I look at that, it makes me think
we are back at DIMHRS 7 years ago and that we are spending a
lot of money and we are not actually achieving the success we
need.
So I want that to be on the radar. You know, again, that is
a concern.
A final comment would be we are grateful for all three of
you and your colleagues that are working hand in hand with you
on this important issue. And, as Mr. Lankford said, we have the
best military in the world, and it is tremendous in defending
this country, but if we can get these issues right, we will
have an even greater ability to provide the resources that that
military needs to continue its heroic efforts on behalf of our
Nation.
And I know each of you share this perspective that we
really are about not that heroic effort to get a check but to
put in place long-term solutions so that this is a systemic
change in the mindset of the personnel, in the systems in
place, in every aspect, that 2017 will be the start of a long
history of DOD being able to say we know how much money we've
got, we know where it is going, how it was used, year in and
year out, day in and day out. Because that will better serve
all the managers in DOD who are using those resources for the
good of the military personnel.
We look forward to continuing to work with each of you and
your offices going forward. As I said, Mr. Towns and I have
been partnering on this issue for almost a decade now, and
hopefully neither one of us is going anywhere anytime soon. We
might keep trading chairs sometimes. I don't know. Hopefully
not anytime soon, changing our chairs here. But it is something
that we very much believe in the importance of and as good
partners we do right by the American people and our military
personnel and their families.
So we will keep the record open for 2 weeks for additional
information, and thank you, again, for your testimony.
This hearing stands adjourned.
[Whereupon, at 11:40 a.m., the subcommittee was adjourned.]