[Senate Hearing 115-901]
[From the U.S. Government Publishing Office]
S. Hrg. 115-901
NOMINATIONS OF THE HONORABLE DAVID L. NORQUIST TO BE UNDER SECRETARY OF
DEFENSE, COMPTROLLER; ROBERT B. DAIGLE TO BE DIRECTOR OF COST
ASSESSMENT AND PROGRAM EVALUATION, DEPARTMENT OF
DEFENSE; AND ELAINE A. McCUSKER TO BE PRINCIPAL DEPUTY UNDER SECRETARY
OF DEFENSE, COMPTROLLER
=======================================================================
HEARING
before the
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MAY 9, 2017
__________
Printed for the use of the Committee on Armed Services
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: http://www.govinfo.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
62-890 PDF WASHINGTON : 2024
COMMITTEE ON ARMED SERVICES
JOHN McCAIN, Arizona, Chairman
JAMES M. INHOFE, Oklahoma JACK REED, Rhode Island
ROGER F. WICKER, Mississippi BILL NELSON, Florida
DEB FISCHER, Nebraska CLAIRE McCASKILL, Missouri
TOM COTTON, Arkansas JEANNE SHAHEEN, New Hampshire
MIKE ROUNDS, South Dakota KIRSTEN E. GILLIBRAND, New York
JONI ERNST, Iowa RICHARD BLUMENTHAL, Connecticut
THOM TILLIS, North Carolina JOE DONNELLY, Indiana
DAN SULLIVAN, Alaska MAZIE K. HIRONO, Hawaii
DAVID PERDUE, Georgia TIM KAINE, Virginia
TED CRUZ, Texas ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina MARTIN HEINRICH, New Mexico
BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts
LUTHER STRANGE, Alabama GARY C. PETERS, Michigan
Christian D. Brose, Staff Director
Elizabeth L. King, Minority Staff Director
(ii)
C O N T E N T S
_______________________________________________________________________
may 9, 2017
Page
Nominations of the Honorable David L. Norquist to be Under 1
Secretary of Defense, Comptroller; Robert B. Daigle to be
Director of Cost Assessment and Program Evaluation, Department
of Defense; and Elaine A. McCusker to be Principal Deputy Under
Secretary of Defense, Comptroller.
Members Statements
McCain, Senator John............................................. 1
Reed. Senator Jack............................................... 3
Witness Statements
McCusker, Elaine A., to be Principal Deputy Under Secretary of 4
Defense, Comptroller.
Advance Policy Questions....................................... 30
Questions for the Record....................................... 38
Nomination Reference and Report................................ 40
Biographical Sketch............................................ 40
Committee on Armed Services Questionnaire...................... 41
Daigle, Robert B., to be Director of Cost Assessment and Program 6
Evaluation, Department of Defense.
Advance Policy Questions....................................... 41
Questions for the Record....................................... 52
Nomination Reference and Report................................ 54
Biographical Sketch............................................ 54
Committee on Armed Services Questionnaire...................... 55
Norquist, The Honorable David L., to be Under Secretary of 7
Defense, Comptroller.
Advance Policy Questions....................................... 56
Questions for the Record....................................... 65
Nomination Reference and Report................................ 67
Biographical Sketch............................................ 67
Committee on Armed Services Questionnaire...................... 68
Signature Page................................................. 71
(iii)
NOMINATIONS OF THE HONORABLE DAVID L. NORQUIST TO BE UNDER SECRETARY OF
DEFENSE, COMPTROLLER; ROBERT B. DAIGLE TO BE DIRECTOR OF COST
ASSESSMENT AND PROGRAM EVALUATION,
DEPARTMENT OF DEFENSE; AND ELAINE A. McCUSKER TO BE PRINCIPAL DEPUTY
UNDER SECRETARY OF DEFENSE,
COMPTROLLER
----------
TUESDAY, MAY 9, 2017
United States Senate,
Committee on Armed Services,
Washington, DC.
The Committee met, pursuant to notice, at 2:32 p.m. in room
SD-G50, Dirksen Senate Office Building, Senator John McCain
(Chairman of the Committee) presiding.
Committee Members present: Senators McCain, Rounds, Ernst,
Tillis, Sullivan, Perdue, Reed, McCaskill, Gillibrand,
Blumenthal, Donnelly, Hirono, Kaine, King, Warren, and Peters.
OPENING STATEMENT OF SENATOR JOHN McCAIN, CHAIRMAN
Chairman McCain. The Senate Armed Services Committee meets
today to consider the nomination of David Norquist to be Under
Secretary of Defense, Comptroller; Robert B. Daigle to be
Director of Cost Assessment and Program Evaluation; and Elaine
A. McCusker to be Principal Deputy Under Secretary of Defense,
Comptroller.
Mr. Norquist, Mr. Daigle, and Ms. McCusker, we thank you
for joining us this morning. We also welcome your families and
friends here with us today. As is our tradition, at the
beginning of your testimony, we would invite you to introduce
those that are joining you today.
It is the standard for this Committee to ask certain
questions in order to exercise its legislative and oversight
responsibilities. It is important that this Committee and other
appropriate committees of Congress be able to receive,
testimony, briefings, and other communications of information.
In response to these questions, just respond by saying yes or
no.
Have you adhered to applicable laws and regulations
governing conflicts of interest?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Will you ensure that your staff complies
with deadlines established for requested communications,
including questions for the record in hearings?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Will you cooperate in providing witnesses
and briefers in response to congressional requests?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Will those witnesses be protected from
reprisal for their testimony or briefings?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Do you agree, if confirmed, to appear and
testify upon request before this Committee?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Do you agree to provide documents,
including copies of electronic forms of communication, in a
timely manner when requested by a duly constituted committee or
to consult with the Committee regarding the basis of any good
faith delay or denial in providing such documents?
Ms. McCusker. Yes.
Mr. Daigle. Yes.
Mr. Norquist. Yes.
Chairman McCain. Have you assumed any duties or undertaken
any actions which would appear to presume the outcome of the
confirmation process?
Ms. McCusker. No.
Mr. Daigle. No.
Mr. Norquist. No.
Chairman McCain. All three of you are being nominated for
positions directly responsible for helping guide the Department
of Defense (DOD) through extremely challenging times. The
country is facing the most diverse array of challenges and
crises since World War II, and to make matters worse, our
financial house is not in order. Truth be told, I do not envy
any of you.
In fiscal year 2018, which begins less than 5 months from
now, the original Budget Control Act (BCA) caps are set to
return. Both Republicans and Democrats know that the Budget
Control Act discretionary spending caps are unacceptably low
budgets for defense. President Trump's estimated budget is $216
billion, in excess of the BCA caps in their 4 remaining years.
Even President Obama's budget was $113 billion above the BCA
caps, and that budget would have barely slowed the
deterioration of our military readiness and capability. Yet,
these caps are the law of the land. Changing or eliminating
them will require a bipartisan budget deal that would be
difficult under any circumstances, let alone our current
political state.
We are now 3 weeks past the deadline to pass a fiscal year
2018 budget resolution. Yet, there is still no serious
conversation that I am aware of in this body or anywhere else
in Washington about what a bipartisan budget agreement would
look like and how it would be achieved.
Each day the Congress does nothing to negotiate a budget
deal simply increases the likelihood that the Department of
Defense will once again start out the fiscal year under a
continuing resolution (CR). If Congress continues business as
usual, then the Department will continue to face the same
problems, financial instability, uncertainty, and a mismatch of
resources to requirements.
Internally the Department faces just as many challenges.
Twenty seven years ago, the Chief Financial Officers Act was
passed, and to this day, the Department of Defense is still not
auditable. I repeat. To this day 27 years later, the Department
of Defense is still not auditable. The Department of Defense is
the only department in the Federal Government which has failed
to meet this mandate. The Department now has until September
30, 2017 to be audit-ready, a deadline I am skeptical the
Department will be able to meet. This has been a very public
continuing failure for the Department of Defense in large part
due to the failure of senior management to make this a priority
for the Department and invest the necessary time and will to
get it done.
This must end with you, Mr. Norquist and Ms. McCusker. As
this Committee considers your nomination for key posts in the
Under Secretary of Defense, Comptroller's Office, making the
Department auditable remains one of the Committee's highest
priorities. I believe that will only be possible when the right
leaders who share the same goals are in the right position.
Lastly, the Department of Defense must rein in cost
overruns. This Committee has done much to reform the
acquisition system over the past 2 years, but the fact remains
that the Department still has too many programs, both big and
small, which are either facing cost growth or under-performing.
Given the budget challenges I already mentioned, we simply
cannot afford to wait until a program has reached a critical
stage and breached Nunn-McCurdy before taking corrective
action.
The Department of Defense and Congress must work together
to be proactive in our oversight role and identify troubled
programs sooner rather than later.
We look forward to hearing your testimony on how you intend
to lead the Department through these challenging issues.
Senator Reed?
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you, Mr. Chairman. Let me join you in
welcoming the witnesses and also thank them for their service
to the Nation already and also to the families that support
them in their efforts. So thank you very much.
The nominees before us today have impressive records of
service and expertise and are well qualified for the positions
to which they have been nominated.
Mr. Norquist has previously served as the Chief Financial
Officer of the Department of Homeland Security (DHS) where he
was instrumental in their financial audit process, among other
responsibilities. Before that, Mr. Norquist served in the DOD's
[Department of Defense] Comptroller Office and as a member of
the professional staff of the House Defense Appropriations
Subcommittee.
Ms. McCusker is currently serving as the Director of
Resources Analysis at CENTCOM [U.S. Central Command]
headquarters where she oversees the financial management of the
combatant commander's operational requirements. Previously she
served as a professional staff Member of this Committee for
Senator John Warner--thank you--and as a special assistant to
the Assistant Secretary of the Navy for the MRAP program and as
Deputy Director in the DOD's Comptroller Office.
Mr. Daigle is currently working on the staff of the House
Armed Services Committee, leading Chairman Thornberry's team on
acquisition policy reform. He also performed exceptional
service leading the staff on the Military Compensation and
Retirement Modernization Commission and has prior experience in
the Pentagon. He also served as an enlisted soldier early in
his career, which is your most significant accomplishment, sir.
If confirmed, all three of these nominees will be
instrumental in the preparation and execution of DOD's budget,
the completion of an audit of the entire Department, as the
Chairman has emphasized, and the independent cost analysis of
major acquisition programs.
The Committee looks forward to hearing your views on these
and other complex issues. Thank you for your dedication.
Thank you, Mr. Chairman.
Chairman McCain. We will begin with you, Ms. McCusker.
STATEMENT OF ELAINE A. McCUSKER TO BE PRINCIPAL DEPUTY UNDER
SECRETARY OF DEFENSE, COMPTROLLER
Ms. McCusker. Thank you, Mr. Chairman and Senator Reed,
Members of the Committee. It is a privilege to be here to
answer your questions regarding my nomination to the position
of Principal Deputy Under Secretary of Defense, Comptroller.
I am humbled and honored by the confidence Secretary Mattis
and the President have placed in me with this nomination.
Before I provide a brief statement, I would like to
introduce and offer my deepest appreciation to my mother
Kathleen, my sister Michele, and my friend Mary, who are here
today.
Chairman McCain. Welcome.
Ms. McCusker. I have a deep personal commitment and
dedication to the U.S. military and to the security of this
great Nation. I have been fortunate to work in various
positions for a series of great leaders. Amazing teammates have
allowed me to leverage my skills in the service of the country
that I love.
I also have a keen appreciation for the challenges facing
the Department, particularly in the area of resourcing. It is
important that we carry out legal, ethical, and accountable
budgeting and financial management so the Department can
maintain focus on rebuilding and maintaining the readiness and
capability necessary to carry out its roles and
responsibilities.
The Comptroller has several important challenges and
opportunities to attack in the coming months. To name just a
few, if confirmed, my priorities will include supporting the
Secretary in obtaining the top line defense budget and
resources necessary to rebuild the military; participating in
defense strategy, reform, and other reviews; and starting the
Department's first full audit.
If I am confirmed, I will work in close partnership with my
colleagues here on the panel to link strategy to resourcing.
Together we must provide sound analysis and compelling
justifications for the resources the Department requests.
Continued interactions with this Committee will be critical.
I have more than 20 years of experience in academia, the
private sector, on Capitol Hill, in the Pentagon, and at U.S.
Central Command. I have built a diverse skill set that, if
confirmed, I will aggressively and relentlessly apply to the
duties and responsibilities of the Principal Deputy Comptroller
and to the challenges facing the Department.
I am grateful for your consideration, and I look forward to
your questions. Thank you.
[The prepared statement of Ms. McCusker follows:]
Prepared Statement by Elaine McCusker
opening statement
Thank you, Mr. Chairman, Senator Reed, Members of the Committee. It
is a privilege to be here to answer your questions regarding my
nomination to the position of Principal Deputy Under Secretary of
Defense for Comptroller.
I am humbled and honored by the confidence Secretary Mattis and the
President have placed in me with this nomination.
Before I provide a very brief statement, I would like to introduce
and offer my deepest appreciation to my mother, Kathleen McCusker and
my sister, Michele McCusker-Whiting for being here today.
I have a deep personal commitment and dedication to the U.S.
military and to the security of this great nation. I have been
fortunate to work in various positions for a series of great leaders.
Amazing teammates have allowed me to leverage my skills in the service
of the country that I love.
I also have a keen appreciation for the challenges facing the
Department, particularly in the area of resourcing. It is important
that we carry out legal, ethical and accountable budgeting and
financial management so the Department can maintain focus on rebuilding
and maintaining the readiness and capability necessary to carry out its
roles and responsibilities for the nation.
The Comptroller has several important challenges and opportunities
to attack in the coming months. To name just a few, if confirmed, my
priorities will include:
1) Supporting the Secretary in obtaining the top line defense
budget and resources necessary to rebuild the military;
2) Participating in defense strategy, reform and other reviews;
3) Starting the Department's first full audit.
If I am confirmed, the DOD Comptroller, in partnership with my CAPE
colleague here on the panel, performs a critical role in linking
strategy to resourcing. Together, we must provide sound analysis and
compelling justifications for the resources the Department requests.
Continued interactions with the Committee will be critical.
I have more than 20 years of experience in academia, the private
sector, on Capitol Hill, in the Pentagon, and at U.S. Central Command.
I have built a diverse skill set that, if confirmed, I will
aggressively and relentlessly apply to the duties and responsibilities
of the Principal Deputy Comptroller position and to the challenges
facing the Department.
I am grateful for your consideration and I look forward to your
questions. Thank you.
Chairman McCain. Thank you.
Mr. Daigle?
STATEMENT OF ROBERT B. DAIGLE TO BE DIRECTOR OF COST ASSESSMENT
AND PROGRAM EVALUATION, DEPARTMENT OF DEFENSE
Mr. Daigle. Thank you. Chairman McCain, Ranking Member
Reed, and distinguished Members of the Committee, thank you for
the opportunity to appear before you today and for your
consideration of my nomination to be the Director of Cost
Assessment and Program Evaluation, or CAPE. It is truly an
honor to appear before you.
I am grateful that President Trump had the confidence to
nominate me for this position, and I thank Secretary Mattis for
his support.
First, please allow me to introduce my wife and two boys,
who are with me today. You should know that we are a defense
family. My wife Veronica recently left CAPE. My oldest son
Mitchell interned at the House Armed Services Committee last
summer, and my son Justin wants to build either military robots
or satellites. He just has not decided which.
Chairman McCain. Welcome to all.
Mr. Daigle. CAPE is truly an exceptional organization. It
plays a crucial role in providing independent cost and schedule
estimates that improve the performance of the defense
acquisition system. It objectively analyzes defense programs.
Its analyses allow the Secretary of Defense to make informed
decisions. It also uses these cost and program analyses, in
collaboration with its Comptroller partners, to develop
alternative investment strategies for the Department's future
year's defense program. But most important, CAPE comprises a
team of highly talented, experienced, and dedicated
professionals that make the organization exceptional. If
confirmed, it would be my honor to lead such an organization.
I have a decade of experience analyzing defense programs,
as the lead for acquisition policy on the House Armed Services
Committee, as the Executive Director of the Military
Compensation and Retirement Modernization Commission, and as a
member of the CAPE team. If confirmed, I would leverage these
experiences to help rebuild the capability and capacity of our
Armed Forces.
Defense sequestration constraints must be eliminated as
they have weakened our military at a time when threats to our
Nation all across the globe are rising. Concurrently,
additional reforms must be pursued so that available resources
are used to maximize the lethality of our Armed Forces. If
confirmed, I would welcome the opportunity to assume the
responsibilities of this position and, with my colleagues here
on the panel, support the Secretary of Defense in these
efforts.
Thank you again, and I look forward to answering your
questions.
[The prepared statement of Mr. Daigle follows:]
Prepared Statement by Robert Daigle
opening statement
Thank you. Chairman McCain, Ranking Member Reed, and distinguished
Members of the Committee, thank you for the opportunity to appear
before you today and for your consideration of my nomination to be the
Director of Cost Assessment and Program Evaluation, or CAPE. It is
truly an honor to appear here before you.
I am grateful that President Trump had the confidence to nominate
me for this position, and I thank Secretary Mattis for his support.
First, please allow me to introduce my wife and 2 boys, who are
with me today. You should know that we are a defense family--my wife
Veronica recently left CAPE, my oldest son Mitchell interned with the
House Armed Services Committee last summer, and my son Justin wants to
build either military robots or satellites--he just hasn't decided
which.
CAPE is truly an exceptional organization. It plays a crucial role
in providing independent cost and schedule estimates that improve the
performance of the defense acquisition system. It objectively analyzes
defense programs; its analyses allow the Secretary of Defense to make
informed decisions. It also uses these cost and program analyses, in
collaboration with its Comptroller partners, to develop alternative
investment strategies for the Department's Future Year's Defense
Program. But, most important, CAPE comprises a team of highly talented,
experienced, and dedicated professionals that make the organization
exceptional. If confirmed, it would be my honor to lead such an
organization.
I have a decade of experience analyzing defense programs--as the
lead for acquisition policy on the House Armed Services Committee, as
the Executive Director of the Military Compensation and Retirement
Modernization Commission, and as a member of the CAPE team. If
confirmed, I would leverage these experiences to help rebuild the
capacity and capability of our Armed Forces. The Budget Control Act,
whose sequestration constraints must be eliminated, has weakened our
military at a time when threats to our national security all across the
globe are rising. Concurrently, additional reforms must be pursued so
that available resources are used to maximize the lethality of our
Armed Forces. If confirmed, I would welcome the opportunity to assume
the responsibilities of this position and support the Secretary of
Defense in these efforts.
Thank you again, and I look forward to answering your questions.
Chairman McCain. Thank you.
Mr. Norquist?
STATEMENT OF HONORABLE DAVID L. NORQUIST TO BE UNDER SECRETARY
OF DEFENSE, COMPTROLLER
Mr. Norquist. Chairman McCain, Ranking Member Reed, and
Members of this Committee, it is an honor to appear before you
today as President Trump's nominee to be Under Secretary of
Defense, Comptroller, and Chief Financial Officer (CFO). I am
humbled by the confidence the President and Secretary Mattis
have shown in nominating me, and I thank the Committee for its
consideration of my nomination.
On a personal note, I would like to recognize my father,
Warren Norquist. The lessons my parents taught me are the
foundation of who I am.
I would also like to express my appreciation to my wife
Stephanie for her love, her dedication to our family, and
especially her willingness to support me in this nomination
process as she is all too familiar with the long hours that
would accompany a return to government service.
Finally, my children, Warren, Elise, and Vivian. They are a
constant reminder that the decisions we make today determine
the America they will live in tomorrow.
Chairman McCain. Welcome to the family, and we are very
happy your brother is not here today.
[Laughter.]
Mr. Norquist. I began my career as a Federal civil servant,
a GS-9 program/budget analyst, working for the Department of
the Army. Over the last 28 years, I have worked financial
management at virtually every level at which the Federal
Government spends or oversees the expenditure of money, to
include serving as Director of Resource Management at a
military field site overseas, as well as Chief Financial
Officer of the Department of Homeland Security.
Each of these positions has the dual responsibility of
protecting the Nation and protecting the taxpayers? money. It
is a profound responsibility, but these are things I believe in
passionately. It is what I do for a living. It is why I enjoy
my work.
Should I be confirmed as Under Secretary of Defense,
Comptroller, my duties would include working within the
administration and with the Congress to build robust defense
budgets that fully support the Department's mission and the men
and women in our Armed Forces.
Unfortunately, we would not start from level ground. Years
of sequestration have seriously undermined the readiness of our
military and delayed its modernization. The fiscal year 2017
omnibus is a first step and the pending fiscal year 2018 budget
will be another. But this needs to be the beginning, not the
end. Significantly more needs to be done, including fully
eliminating sequestration-level caps for the defense budget.
It is fitting that the Committee should consider the three
of us in one panel. Helping the Secretary make the case for the
right level of funding for defense requires close cooperation
between Comptroller and CAPE. I believe I am safe in speaking
for my colleagues when I say that should we be confirmed, we
are committed to working as a team to achieve Secretary Mattis?
objective of a larger, more capable, and more lethal joint
force, driven by a new national defense strategy.
If confirmed as Chief Financial Officer, I would also be
responsible for improving the Department's financial management
practices. As the topic of the audit has come up in several of
my meetings with you, let me address it directly.
It is time to audit the Pentagon. For 7 years or more, the
Department has engaged in audit readiness, preparing for a full
scope audit without starting it. This approach has diminishing
returns. President Trump has called for conducting a full audit
of the Pentagon. If confirmed, I would implement the
President's vision.
I recognize it will take time for the Department to go from
being audited to passing an audit. Everything you have heard
about the size and the complexity of the Department is true,
and this legitimately makes any endeavor, including an audit,
harder. But that is not a reason to delay the audit. That is a
reason to begin.
In 2006, DHS was in a similar position, having never passed
a financial statement audit. When I was confirmed as CFO of the
Department of Homeland Security, I implemented a process of
remediation and accountability. Today, DHS has achieved four
consecutive clean opinions. It was a bipartisan effort that
depended upon strong support from Congress. If confirmed, and
with this Committee's support, I believe we can bring similar
change to the Department of Defense.
In closing, I would like to thank the Committee for its
consideration of my nomination, and I look forward to answering
your questions. Thank you, Mr. Chairman.
[The prepared statement of Mr. Norquist follows:]
Prepared Statement by David L. Norquist
opening statement
Chairman McCain, Ranking Member Reed, and Members of this
Committee, it is an honor to appear before you today as President
Trump's nominee to be Under Secretary of Defense (Comptroller) and
Chief Financial Officer. I am humbled by the confidence that the
President and Secretary Mattis have shown in recommending me, and I
thank this Committee for its consideration of my nomination.
On a personal note, I would like to recognize my father, Warren
Norquist. The lessons my parents taught me are the foundation of who I
am.
I would also like to express my appreciation to my wife, Stephanie,
for her love, her dedication to our family, and especially her
willingness to support me in this nomination process as she is all too
familiar with the long hours that would accompany a return to
government service.
Finally, my children, Warren, Elise, and Vivian. They are a
constant reminder that the decisions we make today determine the
America they will live in tomorrow.
I began my career as a Federal civil servant, a GS-9 Program/Budget
analyst working for the Department of the Army. Over the last 28 years,
I have worked financial management issues at virtually every level at
which the Federal Government spends or oversees the expenditure of
money, positions ranging from Director of Resource Management at a
military field site overseas to the Chief Financial Officer (CFO) of
the Department of Homeland Security (DHS).
Each of these positions has had the dual missions of protecting
this Nation's security and protecting the taxpayers' money. It is a
profound responsibility, but these are things I believe in
passionately. It is what I do for a living. It is why I enjoy my work.
Should I be confirmed as Under Secretary of Defense (Comptroller),
my duties would include working within the Administration and with
Congress to build robust defense budgets that fully support the
Department's mission and the men and women in our Armed Forces.
Unfortunately, we would not start from level ground. Years of
sequestration have seriously undermined the readiness of our military
and delayed its modernization. The fiscal year 2017 Omnibus is a first
step and the pending fiscal year 2018 budget will be another. But, that
needs to be the beginning, not the end. Significantly more needs to be
done, including fully eliminating sequestration-level caps for the
defense budget.
It is fitting that the Committee should consider the three of us in
one panel. Helping the Secretary make the case for the right funding
for Defense requires close cooperation between Comptroller and CAPE. I
believe I am safe in speaking for my collogues when I say that should
we be confirmed, we are committed to working as a team to achieve
Secretary Mattis' objective of ``a larger, more capable, and more
lethal joint force, driven by a New National Defense Strategy.''
If confirmed, as Chief Financial Officer I would also be
responsible for improving the Department's financial management
practices. As the topic of the audit has come up in several of my
meetings with you, let me address it directly.
It is time to audit the Pentagon. For 7 years or more, the
Department has engaged in audit readiness, preparing for a full scope
audit without starting it. This approach has diminishing returns.
President Trump has called for ``conducting a full audit of the
Pentagon.'' If confirmed, I would implement the President's vision.
I recognize it will take time for the Department to go from being
audited to passing an audit. Everything you have heard about the size
and complexity of the Department is true, and this legitimately makes
any endeavor, like an audit, harder. But that is not a reason to delay
the audit--it is the reason to begin.
In 2006, DHS was in a similar position having never passed a
financial statement audit. When I was confirmed as CFO of the
Department of Homeland Security, I implemented a process of remediation
and accountability. Today, DHS has achieved four consecutive clean
opinions. It was a bipartisan effort that depended upon strong support
from Congress. If confirmed, and with this Committee's support, I
believe we can bring similar change to the Department of Defense.
In closing, I would like to thank the Committee for its
consideration of my nomination, and I look forward to answering your
questions.
Chairman McCain. Thank you.
Again, welcome to all the family members who are here
today. I know you are proud of these individuals? service to
the country and willingness to continue.
I think all three of you are very highly qualified despite
having worked over on the other side of the Capitol. We will
forgive those indiscretions.
[Laughter.]
Chairman McCain. I just have one question that I want to
explore with you. We have been wrestling, as I mentioned, for
God knows how many years with the audit issue. We have these
cost overruns, and then we invoke Nunn-McCurdy, which is
basically an autopsy because it is so late in a program that
very little can be done about it because of the cost overruns
that have already occurred. But what seems to compound all of
this problem is the fact that we do not have an audit. We do
not know how much money is being spent and on what.
You come before this Committee. There is a terrible cost
overrun, and we complain about it and then next subject, and
yet, we have a $2 billion cost overrun on an aircraft carrier.
The most expensive weapon system in the history is the F-35 and
the costs are still going up. I could go on and on.
It seems to me that none of the three of you can do your
job unless you have a handle on how much money is being spent.
It would seem to me that would be a fundamental of trying to
address this really unacceptable issue.
I guess I would say, one, why do you think it has taken so
long for us to complete an audit or even actually begin one?
What do you want to do different than what has been done for
the last 17 years as we have not completed an audit? What, in
your view, is the smartest thing we can do to avoid these
massive cost overruns which are an embarrassment to all of us
who are supporters of a strong national defense? We will begin
with you, Ms. McCusker.
Ms. McCusker. Thank you, Senator.
My understanding of what has prevented us from getting to
an audit to this point is a long history of complex and diverse
financial systems that were not designed to be auditable. They
were really designed with budgetary reporting in mind and not
financial statements. Combine that with just sort of the
difficulty of placing a priority on this over time and the
legacy systems not being able to talk to each other, I think
that is what has led us to the point where we are today.
I think what we are going to do differently is start the
audit. As Mr. Norquist said in his opening statement, we have
spent some considerable time and effort on audit readiness, and
the time is now to start the audit so we can aggressively
pursue corrective action plans that have accountability matrix
in them and we can start reporting some progress.
Chairman McCain. You are confident we can do it?
Ms. McCusker. I am confident we can get started.
Chairman McCain. Whoops. After 17 years, we can get
started?
Ms. McCusker. Yes. I think we have to get started so we can
understand what it is going to take from what we find on the
first audit to see how long it is going to take us to actually
get to a clean audit. I do not think we can predict at this
point how long that is going to take until we really start
going after our action plans.
Chairman McCain. Mr. Daigle?
Mr. Daigle. I think there are two things that can be done
in the short term.
Chairman McCain. First of all, why do you think we have not
been able to conduct an audit? Then what needs to be done?
Mr. Daigle. Senator, I am not an expert on audit. I am not
sure why we have not been able to do it.
I would, instead, think that one of the things that we
could do better than we do right now is data analytics inside
the Department. Even after we get to a point where we have an
audit, the underlying business systems, as I understand it,
will still often have disparate data structures. One of the
issues that CAPE has to deal with or any of the analytic
organizations have to deal with inside the Department is
Congress asks a question or the Secretary asks a question, and
the first thing we have to do is a data call. CAPE gets
information back, and then it has to spend time manually
putting that data together, as Elaine said, from various legacy
systems into a common data set.
Reversing that thought process where we get closer to data
analytics up front and a common data structure where we can
avoid that kind of manual work every time will go a long way
towards allowing the Department to centrally see what is going
on across the enterprise and answer the questions that you are
asking in a more timely manner.
Chairman McCain. Mr. Norquist, in addition to what I just
asked also, you were able to achieve an audit at the Department
of Homeland Security. Except for size, what is the difference?
Mr. Norquist. Let me take your questions in order, Mr.
Chairman.
First off, why does it take so long to start an audit? It
should not. This is just a matter of priority. There are
technical reasons on what it takes to pass an audit, but
starting an audit is a matter of driving change inside a
bureaucracy that may resist it. The challenge in a large
organization, Homeland Security and Defense, is there is a lot
of other demands. Leadership not only has to make it a
priority, they have to continue to make it a priority when
other things are distractive. It does not have to be the top
priority, but it has to be one of the priorities over a
sustained period of time. I think that challenge of maintaining
that level of energy has kept the Department not just from
passing on it but even starting the audit.
The next question you asked about is, what would you do
differently? First, of course, you need to start the audit. But
from there, the audit has a number of things in it that are
tremendously helpful if it is done correctly. When I was at
DHS, the IG [Inspector General] worked with us, and his audit
report did not just say ``pass/fail,'' it included a chart.
Each organization across the top, each weakness down the side,
and a red box whenever an organization contributed to the
Department weakness. Somebody inside the Pentagon can say I do
not contribute really, but that is because it is such a large
thing. But if you see yourself called out, the answer is, well,
can you fix the two problems within your control. That is all.
Just fix those two. As each of them is held accountable fixing
in their area, the problem becomes smaller and more manageable.
One of the things to drive change is to move it so you can
see the accountability for the corrective action plans at a
level where people actually have the authority and the ability
to implement change. That is one of the things that we did at
Homeland Security. That is one of the things that I would look
to bring to the Department of Defense is that corrective action
plan linked to accountability over remediating those
weaknesses.
I think in regard to your question about overruns, one of
the challenges is both accurate data, but also the timeliness
of the information. How hard is it or how easy is it to get
information about the changes so you can anticipate it rather
than, as you pointed out, just doing the autopsy afterward?
Then your last question is what is the difference between
the Department and Homeland. It is really a matter of size. I
think the other main difference is at Homeland we did not have
a choice. When I was confirmed, the audit had already started,
and so we were already underway. That is actually a huge help
because I already had the prior year report. Should I be
confirmed at Defense, we will not have that instantly, but that
is the reason to get it started because it is such a useful
tool. The scale will be there. Okay, that is fine. It just will
take a number of challenges to work through it. But it is the
same approach, and the same solution should be effective.
Chairman McCain. Senator Reed?
Senator Reed. Thank you all very, very much.
Let me direct a question following this line of questioning
about the audit to Mr. Norquist and Ms. McCusker.
I think you made a very good point in your opening
statement, Mr. Norquist. I think the Department was waiting for
the moment, they could pass an audit, and that is like waiting
for Godot. It never really comes the first time out for any
organization is my sense.
But I suspect in the process of starting the audit, you are
going to find not only constraints within the Department but
also perhaps statutory issues. Both you and Ms. McCusker, I
hope, would keep the Committee informed of additional
legislative steps that we can take. The Chairman has been an
extraordinary leader on acquisition, along with Chairman
Thornberry. But I think we could benefit, as well as the
Department, from the audit. I will just get your thoughts on
that point and then Ms. McCusker.
Mr. Norquist. I completely agree, and there may be areas
where there is a legislative requirement to do something one
way that is inconsistent with accounting standards. I would
look, should I be confirmed, to come back to the Committee and
say what was the intent of that legislation and can we achieve
it a different way that does not convolute the financial
transaction processes.
Senator Reed. Thank you.
Ms. McCusker, your comments.
Ms. McCusker. Yes, I absolutely agree. I think that there
is going to be a lot of important things that we are going to
learn during this first cycle, and if we learn anything from a
statutory perspective, we will absolutely keep in touch with
you and work with you to resolve those issues.
Senator Reed. Thank you.
Mr. Daigle, CAPE has extraordinary responsibilities in
terms of developing these new weapons platforms and monitoring
the development. Many times we look back sort of with chagrin
because the requirements from this perspective look absolutely
unrealistic. One of your challenges is coming up with very
realistic, very practical requirements that advance the
capabilities of the service but they are not unreachable and so
expensive.
Can you give us a sense of how you are going to approach
that issue?
Mr. Daigle. Senator, my first steps would be to implement
the acquisition reforms that both chambers implemented last
year, which I think goes directly to the question you are
asking. Part of it is making sure that the results of the
analysis of alternatives on the front end of an acquisition
system where we look at a gap in capabilities and assess
alternative ways of meeting that gap or fulfilling that gap are
teed up to the senior levels of the Department in a way that
brings the requirements and the resourcing and the acquisition
communities together. So Having those three silos, if you will,
historical silos of the overall big A acquisition system
together, making that trade space early on, and trying to
figure out what is affordable within the top line will help
address the kind of gold-plated requirements that we have heard
about through the years.
The second piece of that is the independent cost estimation
process, since the Weapon Systems Acquisition Reform Act,
WSARA, was implemented in 2009, has really been quite
effective. We see that the cost estimates between CAPE and the
Services have come much closer. We have seen a decline in the
number of Nunn-McCurdy breaches. We have seen a decline in cost
growth since WSARA on weapons programs. Continuing that good
behavior is going to be instrumental.
The last thing I would say is more analysis and more
consideration up front of the sustainment tails of the weapon
systems must be part of the next step of what we do in the
acquisition arena.
Senator Reed. Let me just ask very quickly because my time
is short of all three of you. Mr. Daigle alluded to it in his
opening statement.
Big organizations, CVS, Amazon, have mastered or at least
done much better with big data than DOD and using that, as Mr.
Daigle suggested, to really fine tune their programs, their
platforms, delivery systems, whatever. In fact, my sense--and
you can correct me--is that unlike the good old days when DOD/
Pentagon led the way on these things, they are very far behind
in terms of harnessing big data.
Just quickly your comment on that point, Mr. Norquist, Mr.
Daigle, and Ms. McCusker.
Mr. Norquist. I agree with you, Senator. I would point out
that part of the use of data analytics, one, is to clean up the
data, but once you have reliable data, there are more things
you can do with it. There are more opportunities for reform and
efficiency that start with everyone agreeing that these are the
right numbers. I think it opens the door to make greater use of
data analytics.
Senator Reed. Thank you.
Mr. Daigle?
Mr. Daigle. I agree completely, Senator, and if confirmed,
I would be quite eager to work on that.
Senator Reed. To your knowledge, who is responsible for the
big data effort now or anyone in the Department? Would that be
the Comptroller, or is it something that the-- Secretary Work
or somebody?
Mr. Daigle. It is my understanding the leading person or
the leading organization right now is the DCMO [Deputy Chief
Management Officer].
Senator Reed. Ms. McCusker?
Ms. McCusker. Yes, I absolutely agree as well. I think that
any opportunity we have to leverage the capabilities and
technology, as you mentioned in terms of the big companies, the
Department should look into that, and if confirmed, I would
definitely do that.
Senator Reed. Thank you.
Thank you very much, Mr. Chairman.
Chairman McCain. Senator Perdue?
Senator Perdue. Thank you, Chair.
Mr. Norquist, what reasons do you believe have been given
so far that are credible in terms of not having the audit? I
just have one quick point before I go to the other two
questions real quick. Have size and complexity been used as a
reason why an audit has not been successfully completed so far?
Mr. Norquist. That is one of the explanations, which is the
size and the complexity. Part of it is since most people in the
organization had not experienced an audit before, you did not
have as much exposure to what it should look like, whereas at
Homeland, we had a number of groups who came together from
places that had at least had an audit, even if they had
struggled, and therefore, they knew what to expect. It was
easier to train or coach them on what was coming.
Senator Perdue. That is a great point. If you look at the
size and complexity issue, my point, coming from the business
world, is the Department of Defense is only a little larger
than Walmart. I cannot imagine Walmart calling the SEC
[Securities and Exchange Commission] or any other agency and
saying we are too large and complex to file our documents this
quarter. I agree with your point.
Secondly, the spend it or lose it. You commented briefly on
that. In 2015, we spent about $275 billion under contracts.
Yet, in the last week of the year, we spent 10 percent of the
entire $275 billion in the last week of the year. Can you
comment on that and what you would do to look at that?
Mr. Norquist. Sure. I think there are two things that
happened. One is an understandable hesitation, if you do not
know exactly how much you are going to have, to move it until
you are certain how you are going to go. So they save it up
until the very end. Then they are like, okay, now I have to
spend it. That is a consequence, a little bit, of
unpredictability.
The other part is the use it or lose it effect of the
legislation, which is----
Senator Perdue. I am sorry. Can I just expand on that
point? So Congress' lack of consistent budgeting and timeliness
of that budget could actually contribute to that? Is that what
you are saying?
Mr. Norquist. It could but it does not have to be Congress.
It could also be the headquarters of your organization. Whoever
is holding your money, if you do not know how much of it you
are going to get, there is a temptation to make sure you can at
least cover the essentials. Then when the additional comes
down, you go like I can do more now. At any level where that
occurs, you can have that challenge.
The other effect, of course, is that O&M [operations and
maintenance] money expires, and this can create an incentive
for people to use it or lose it. I think the point you were
referencing is when Homeland Security was formed, they gave a
provision in there that said if you do not spend it, we will
give you 50 cents for every dollar at the beginning of the next
fiscal year. I think the congressional intent on that was if
you do not spend the dollar in exchange for 50 cents, it was
probably not an exciting use of the dollar and we would like
you not to do it. There are some pros and cons to that I would
want to discuss before somebody did that because there are some
challenges in implementing. But there has been a series of
efforts I know from different people to look at that and say
how do we discourage that sort of behavior.
Senator Perdue. Mr. Daigle, today we acquire a lot of
software, a lot of high-tech stuff, and yet the acquisition
policies and regulatory schemes that govern those were
developed in an era before the development of a lot of this
technology. I mean, this iPhone, for example, has more
computing power than NASA did when we put men on the moon.
The question I have is there are outside groups like the
Defense Innovation Board. I do not know if you guys are
familiar with their work. How would you interact with someone
outside to help us close that gap to get back to the time when
DOD was actually the leader in technology?
Mr. Daigle. Senator, I completely agree. Even in terms of
CAPE's cost estimation processes, they are not really in line
with the way the private sector thinks about cost estimation
for software development. If confirmed, that is one of the
things that I would look at.
The Defense Science Board, for example, is coming forward
soon. I have spoken with them several times about a report that
they have ongoing to look at the way the Department develops
software, tests software, costs software, and deploys software
to warfighters and whether or not we can speed up that entire
process in the same way that updates to your iPhone apps come
out sometimes without your knowledge.
I completely agree that software development is something
that needs a look inside the Department, and if confirmed, I
would absolutely do it.
Senator Perdue. Ms. McCusker, quickly. Our acquisition
processes in space. This is again a technology question. But
the auditing of that--I know in business, the benefit of an
audit is not necessarily just the financial issues. It is also
comparing to best practices and that sort of thing. In a new
area where there may not be best practices, how does an audit
help us prepare for the next gin-up, if you will, in needs for
our space defense?
Ms. McCusker. I think the most immediate thing that comes
to mind is it gives you a chance to do things right from the
start. If you have an audit when you are beginning a new
activity, you have the benefit of developing the reporting
structure and the systems and the accountability that you would
need for an audit.
I cannot speak specifically to the area that you are
referencing, but I can look into that, if confirmed.
Senator Perdue. Great. Thank you.
Thank you, Mr. Chair.
Chairman McCain. Senator Ernst?
Senator Ernst. Thank you, Mr. Chair.
Thank you to our panelists today.
I appreciate what you are attempting to do or hope to
attempt to do within DOD. I served as a county auditor for many
years, and we understand that certainly to get a clean audit,
you have to have an accounting system that actually works. That
is my concern, is that we do not have an accounting system
within the DOD that actually works.
Mr. Norquist, I would like your thoughts on what we can do
to improve the accounting system that currently exists within
DOD, and what other business practices would you implement that
could help us achieve that clean audit of DOD?
Mr. Norquist. Sure. I think the first challenge, as you
pointed out, is there are a large number of accounting systems
in the Department of Defense. It is not essential to get down
to one, but getting down to a small number would be a step in
the right direction.
There are also a lot of feeder systems that are in
accounting but are essential to provide data that were not
built to talk to each other. There are techniques of ways of
sharing data, or at least when a new system is implemented,
that it is set up from the beginning to provide data correctly.
Some of the programs when implemented, if they have a firm that
tests that, not just from a performance perspective, from a
compliance or an audit perspective, you can have greater
confidence that when the systems are turned on, they are going
to do what they are supposed to do.
You talked about other ways of looking at the reform. Under
what we call A-123, you test entire processes and you look at
what are called key controls. The idea is what is it that if it
goes wrong creates the biggest risk to our organization. Do you
know what those controls are and are you monitoring them?
The process of doing that often helps you uncover
inefficiencies. There is a whole process of why is the person
entering the data here and then it being reentered here, and
then it is not being transferred when it goes to this third
player who has to go look it up. It can come out of those
processes where you can find ways to streamline it, and the
best practice is load it once, load it at the beginning, and
make sure it carries consistently through, and that tends to
both reduce costs and improve efficiency.
Senator Ernst. That is very good. That is the type of
attitude and foresight that we are looking for to tackle this
problem in DOD. It has been years. We need to get this done.
The Chairman mentioned cost overruns with a number of
programs, and you mentioned inefficiencies. We have seen that.
The Chairman mentioned the F-35, which is great to develop
these systems to compete with our near-peer competitors.
However, there are times that I think we can use just as
effective means that have cost us less. To that, I am going to
go to Ms. McCusker.
Have you worked with the Combat Dragon program?
Ms. McCusker. Yes, Senator. When I first arrived at
CENTCOM, Combat Dragon was an idea of then General Mattis on
doing an experiment to test the application of light attack air
more closely attached to ground forces. Over the last 5 years,
we conducted an experiment in CONUS [the Continental United
States] and then we deployed a couple of aircraft to Iraq to
test that concept and to test specifically the expeditionary
nature of it and the cost. We kind of pushed the system to see
what it can do.
The final report on that has been sent to the Department
and they are looking at this as an option for the future, maybe
a cheaper way to do things in certain environments.
Senator Ernst. We certainly do have the Combat Dragons in
existence. Right? They were mothballed, put away in hangars. Is
that correct?
Ms. McCusker. Yes. We took a transfer of two OB-10's from
NASA actually to do the experiment and did the weaponization on
them, then de-milled them afterwards.
Senator Ernst. Exactly. I think that proves a point that
there are useful things that we already have in our inventory
that can be used in the right environment and situation. It
does not always have to be the highest technology, the fastest
plane, the most expensive plane that can get the job done.
Sometimes it is just thinking back a little bit and what is the
appropriate use of what we have in our inventory instead of
investing in these high-tech, high-dollar programs, which again
are essential if we need to compete with our near-peer
adversaries. But sometimes programs like that are just as
effective in a different type of environment.
Thank you, Mr. Chair.
Chairman McCain. Senator Rounds?
Senator Rounds. Thank you, Mr. Chairman.
Mr. Norquist, in South Dakota during the time in which we
had audits performed on different State agencies, there was an
opportunity that we used both when I was in the legislature and
then when I was Governor, and that was that the audits would be
delivered to the appropriations committee and then the
authorizing committees. When it came time to look at a program,
the audit was also available to them. In doing so, the
appropriators could ask specific questions about whether or
not, with any discrepancies within the audit, that they could
be rectified or at least the directions or the plan to rectify
would be laid out before the operating committee.
Do you know of any such activity like that within the
Federal Government today?
Mr. Norquist. Yes, Senator. When I was at the Department of
Homeland Security, the audit was a pressing issue, and when
witnesses would come up and testify, the Committee would ask
about the status of the audit and the findings. As certain
groups fixed their problems, the members would point out and
congratulate them for success, and the few that were the
stragglers discovered it far less comfortable to testify
because they were standing out as the reason that the whole
Department was being held back. I know that there is language I
think in the NDAA [National Defense Authorization Act] that
requires that the audits at the Department of Defense go both,
should I be confirmed, to the Comptroller's Office, but also to
Congress.
Senator Rounds. DOD has been forced to operate under
continuing resolutions for extended periods. Can you tell this
Committee your view with regard to continuing resolutions and
your role in assisting the Secretary with possible future CRs?
Mr. Norquist. The challenge with the CR tends to be their
length, and if your organization looks the same in October as
it does in January as it does in May, that may not be an issue.
But at the Department of Defense things change. Programs move
from R&D [research and development] to procurement. Acquisition
numbers are either ramping up or they are ramping down. The
steady state is sort of an unstable and unsatisfactory
position.
I think one of the challenges is trying to avoid CRs,
trying to get predictability over the next several years for
the funding levels. There are things that, should I be
confirmed, I would look to do to try and make them less
disruptive. But even then you are sort of mitigating the
damage. The ideal solution is a several-year plan where you
know where you are going to be and can build budgets
accordingly.
Senator Rounds. Mr. Daigle, sustainment costs are the long-
term driver of the F-35 total cost of ownership. A 2014 GAO
[Government Accountability Office] report estimated that DOD
would incur an extra $4 billion a year in operating and
sustainment if the F-35 was fully fielded as planned. Do you
believe there are any alternative contracting approaches that
could lower these particular costs?
Mr. Daigle. I do not have any specifics right now, but if
confirmed, that is definitely, given the size of the program,
something that CAPE would have a strong hand in evaluating.
Senator Rounds. Ms. McCusker, you stated in the answers to
your advance policy questions that it will be necessary for the
OMB [Office of Management and Budget] to develop a resourcing
strategy which will meet the Department's priorities for
readiness, modernization, capacity, and lethality. How do you
envision your role in this process?
Ms. McCusker. I think in conjunction with Mr. Norquist and
actually Mr. Daigle, we have a central role to perform in
conducting the analysis to link the resources that we need to
conduct a strategy that the President and the Secretary have
outlined in a way that allows us to provide compelling
information to OMB to support the Department's top line.
Senator Rounds. Mr. Daigle, perhaps I am just an optimist,
but I am very hopeful that the new long-range strike bomber,
the B-21, which is under development today, will come in at or
below budget. I am an optimist.
But let us just assume that we have a major program that
actually does come in at or under budget. If that were the case
and in your review you look at it and you find unique planning
or unique things, do you believe that your office is in a
position to share those techniques with other areas to perhaps
see that those planning techniques and so forth be adopted
elsewhere as well?
Mr. Daigle. Absolutely, Senator, more so if we find lessons
learned that work. I would expect to share those in the next
analysis of alternatives on the next program and force the
system to evaluate those best practices. Absolutely.
Senator Rounds. Very good.
Thank you, Mr. Chairman.
Chairman McCain. Senator King?
Senator King. Thank you, Mr. Chairman.
Mr. Daigle, I would like to follow up on those questions.
One of the real issues that has confronted the Defense
Department over the not so recent past but continuously has
been procurement and the escalation of costs and also time,
that it takes so long to bring an idea to fruition. In fact, we
had testimony before this Committee not long ago that companies
in Silicon Valley do not even bid on contracts with the
Pentagon because they find it so burdensome and over-regulated.
What are your thoughts on how we can get a hold of this
procurement process?
One of the things I have observed, we have learned in these
hearings is quite often we are trying to build devices while we
are designing them. That is devices that means everything from
a handgun to a destroyer. Give me your thoughts on how we get
this procurement issue under control because it is hurting the
country and it is hurting the Military Services.
Mr. Daigle. This could be a long answer because there is a
lot to discuss in there.
Let me begin by saying that the work from the committees
over the last couple years in terms of open systems
architecture presents an opportunity, if you will, to
restructure the acquisition system, to take what is typically
considered a major defense acquisition system and break it into
component parts, each of which should be developed and upgraded
on its own technology cycle. Realistically, we are not going to
be in a position where we can build an aircraft carrier
quickly. That is going to take time. Building our next fighter
aircraft will take time to design and test and to build. But it
is the components that get strapped onto those platforms that
really provide the capabilities to the warfighters.
Senator King. Is one possible answer modularization so that
we do not have to rebuild an entire weapon system, but we can
plug and play the different sections?
Mr. Daigle. Absolutely, Senator. At the major defense
acquisition program, that would be an approach that I think the
Department should explore fully.
At the process level, we still have work to be done. If you
think about a typical MDAP, a requirements process can take 2
or 3 years. So I have an idea. I have a gap. I have an idea of
how to fill that gap. I need to specify the requirements for
that. That can take 2 or 3 years. Once I have that done, then I
can request funding in the POM.
Senator King. Why does it have to take 2 or 3 years?
Eisenhower retook Europe in 11 months.
Mr. Daigle. You are getting to the point at the end of the
story, which is we need to figure out faster ways to do this.
It should not take 2\1/2\ years to develop requirements
documents. Within CAPE, typical timelines for an analysis of
alternatives is a couple of years in and of itself. The
planning for these systems needs to be done deliberately, but
it should not take 7 to 9 years to get from I have a capability
gap to somebody who is bending metal to build something to fill
that capability gap.
The front end of that process needs to be evaluated. Part
of that is the programming process and the budgeting process.
Right now, even after we have the requirements done, the
Services have to POM for it, and then it comes up to our
organizations for review. Then it goes over to OMB for review.
Then it comes over here for review, and then the money
eventually ends out back at the program office. That in and of
itself can be 2\1/2\ years.
The time on the front end before we actually start
development of a weapon system in and of itself pushes our
acquisition system far outside of the technology cycle.
Senator King. The time on the front end is the final point
I wanted to make. Abraham Lincoln was once asked what he would
do if he was given an hour to split a cord of wood. His answer
was I would spend the first 15 minutes sharpening his axe.
I hope that before you enter into the maelstrom of this job
and the day-to-day pressures, that you will take some time to
sharpen your axe to think about how to change this system in a
broad and comprehensive way because it is not serving us well,
but it is not going to be fixed if you have to do 16 other
things. I would urge you, as a kind of beginning process, to go
off-site somewhere with some smart people that know about this,
people who work in the government, out of the government, Frank
Kendall, others and say how can we restructure the system to do
it faster, more dependably, and more economically. I think this
is a crucial task as we are going into the B-21, the Ohio
replacement, the missile upgrades, all of the significant
expenditures that we have coming toward us. I hope you will
take some quiet time, if you will, to think about this
systematically rather than just tinkering with it while you are
putting wallpaper up over there.
Thank you, Mr. Chairman.
Mr. Daigle. You have my commitment.
Senator King. Thank you, sir.
Thank you, Mr. Chairman.
Chairman McCain. Mr. Daigle, you might look at the way that
Kelly Johnson of Skunk Works went into the desert of Nevada and
developed an SR-71 in, I think it was, 15 months. What has
changed today? That is what you ought to look at because what
you just described to Senator King is exactly why, after
grappling with this issue in this Committee, we have made so
little progress. It is absolutely disgraceful. I hope you will
start thinking outside the box.
I get a new one of these every week, year, whatever it is
[holds up phone]. Whatever time it takes me to figure it out,
it is time for a new one.
But the point is if they can do this, which is cutting edge
of technology, why in the world would we have to go through
what you just described to Senator King?
Mr. Daigle. I do not have a good answer for that, Senator.
Chairman McCain. I guess we do not either.
Senator Tillis?
Senator Tillis. Thank you, Mr. Chair.
First off, congratulations to all three of you. You should
be very proud and your families as well for being nominated.
On the audit, first, Mr. Norquist, I want to thank you for
the time that we have spent in the office. We were able to
drill down on a number of subjects. I know that the audit has
been covered several times here. I have full confidence that we
will get the underlying systems right and some of the processes
aligned so that they can perform an audit.
But I would encourage you and Ms. McCusker to not go in
there with a mindset, once you get inside there, well, we not
only got to do an audit but we got to be absolutely sure that
we pass everything. The reason why audits exist is to find out
where the vulnerabilities are to create after-audit reports so
that you can act on them. Let us just not get perfect. Let us
get the cycle going. I understand, coming from a firm that
completed these for the private sector, there are some
foundational things that need to be worked on, but we need to
get past this audit-ready mentality which is not only be audit-
ready but make sure we come out with shining colors to actually
just start getting the job done to learn a lot from it.
Mr. Daigle, we were talking about sophisticated equipment.
This is one of my favorite props. Sophisticated equipment,
lengthy delays, and acquisitions. This is for a handgun, 10
years, 680 pages. When you talk to the people that put it
together, they said there are only 39 pages that are technical
specifications. Can I take that out and not have to deal with
the rest? Ten years for a handgun? We are wondering why it
takes 20 years for any sort of complex system. I am surprised
it does not take 50 years if it takes this long to get a
handgun done.
Program evaluation and assessment. To what extent do they
get into assessing the total cost to make an acquisition
decision? In other words, let us not get into what it is going
to cost to field the capability once it has been specced, but
come up with norms for how much it should cost because I am
pretty sure it is not 10 years and 700 pages for a handgun. Is
that within the lanes or possibly within the lanes of the job
you will be assuming?
Mr. Daigle. Senator, that is not something I think CAPE
does on a regular basis. Having said that --
Senator Tillis. Well, who does?
Mr. Daigle. I would look to AT&L [acquisition, technology,
and logistics] for the metrics and for the tracking of how long
things take.
Senator Tillis. When you do program assessment, when you
are finally going back and doing program assessment and an
evaluation, do you go back and take a look at the fully
burdened cost for that program, in other words, all the time
leading up to the actual program initiation?
Mr. Daigle. I do not believe CAPE typically does that.
But having said that, acquisition planning is a program
just like anything else. So CAPE could be tasked to assess how
long that takes, how much it costs.
Senator Tillis. I think it would be helpful. I think that
if we go back and take a look--history could be very
instructive in terms of how we stratify going back to some of
the points that were made about how we can streamline or
expedite acquisitions. I think we are, in some cases, putting a
$100 saddle on a $10 horse. I do not necessarily think the
acquisitions process for a handgun has to rise to the same
level as the Joint Strike Fighter, but I do believe that we
have systems and processes that do not stratify along the lines
of complexity and mission focus. I think that that is an area
that we have to go back, look at existing programs, and see how
they ran off the rails to be instructive to future programs so
that we stratify them appropriately. Does that make sense to
you, how you all can play a role in that?
Mr. Daigle. It does.
Senator Tillis. The last question I had was for either Ms.
McCusker or Mr. Norquist. What do you think is left based--I
know you are not confirmed, so you may have limited
information. But if you take a look at the process leading up
to getting the audit done, what big rocks still need to be
turned over before we are prepared to actually get the audit
completed and start acting on the audit recommendations? Mr.
Norquist?
Mr. Norquist. There are a couple of steps. The first one is
there is a letter the Secretary would sign that, should I be
confirmed, I think is prepared out of the Comptroller's Office
that says, yes, it is worth to go ahead and start the audit.
Several of the contracts are already in place. The IG who owns
all of the contracts for the audits would say go. There is one
with the Navy that has been held up on an issue that needs to
get resolved. Should that be resolved, and you get all of them
underway starting next fiscal year, hopefully you would start
to learn things from it along the way. But certainly at the end
when they give the report, you would have detailed findings,
and then you would have the corrective action plans executed
against them. I think at this point it is making sure that you
continue to have leadership support saying, yes, this is what
we want to do. This is the direction we want to go. Let us get
it started.
Senator Tillis. Thank you, all three, for being here. Best
of luck. I look forward to supporting your confirmations.
Mr. Norquist. Thank you, Senator.
Senator Reed [presiding]. On behalf of the Chairman,
Senator Warren, please.
Senator Warren. Thank you, Mr. Chairman.
Mr. Daigle, thank you for meeting with me earlier today.
I want to talk a bit about your obligations to work with
AT&L to oversee the DOD's major acquisition programs. As you
know, DOD currently spends about $180 billion every year on
acquiring major weapon systems. While the Department has
improved outcomes in recent years, some analysts have suggested
that the reason they have improved outcomes has been more to do
with budget pressures limiting the number of new programs that
were started and forcing more discipline into the few starts
that did occur.
If you are confirmed, you are going to be responsible for
making sure that every taxpayer dollar is spent both
efficiently and wisely. The question I would like to ask, Mr.
Daigle, is if the defense budget increases, as the President
would like, how do you ensure a disciplined approach to what
programs are started and what kind of shape they are in, not
that we just shovel money in, but that we really are
disciplined and are going to get an effective program out on
the other end that is going to contribute significantly to our
safety?
Mr. Daigle. Senator, I would say the answer to that is
strong, independent, unbiased analysis of program requirements,
program capabilities, and program costs, teeing those up to
leadership and oversight bodies and making sure that the folks
that are making the decisions have the best information
available in terms of the pros and cons and the good and the
bad and the ugly of acquisition programs.
Senator Warren. Good. I take it, part of that too, is
making sure that cost estimates are public. We spoke a bit
about this earlier.
Mr. Daigle. Yes, ma'am.
Senator Warren. Good, good.
Mr. Norquist, if I could ask you--again, thank you for
taking the time to meet with me.
We had an interesting conversation about the Department's
progress or maybe I should say delay in finally submitting to
an audit. You know that there is tremendous frustration right
now in Congress about DOD's lack of progress in this area. You
and I talked about why the can keeps getting kicked down the
road on that first audit and particularly about the impact of
the fear of failure.
Let me ask you here in a public hearing. Do you think DOD
can get a clean audit opinion on its first try? Do you think it
matters?
Mr. Norquist. I do not think they can get a clean audit
opinion on their first try, Senator. In fact, I think it would
be unproductive for them to be focused on that. I would rather
everyone be focused on disclosing and discovering as many of
the issues as possible. You know, one of the things that helped
at DHS was I told everyone you are going to fail the first
year. Do not worry about it. Let us see how many of the
problems we can find now because if we find them 3 years from
now, we have lost 3 years worth of opportunity to remediate. My
view is they should not focus on that part. They should focus
on getting started, finding the problems, and fixing them.
Senator Warren. All right, good.
You know, I feel like postponing the audit because you
might not get a good result is kind of like not going to the
doctor because you do not want to hear what the doctor say. It
does not make problems any better.
Mr. Norquist. An excellent analogy, Senator.
Senator Warren. All right, good. I am glad that means you
are going to be a strong voice for pushing towards these
audits.
Can you give us your perspective on the kinds of cultural
changes that hinder progress toward a full audit and how you
think about changing the culture, using your experience from
DHS in that?
Mr. Norquist. Absolutely. There is a cultural aspect to
this. You have organizations that are not used to being
audited. In fact, one of the things that will be a surprise is
they are not used to getting audited on the same thing again.
So the auditor comes through. He writes your recommendation.
You say, okay, we made a mistake. Thank you and we promise to
do better. Well, they come back. They come back every year.
That is not a problem. That is actually a huge help because now
when you fix something, a year later he will be saying, well
done, it is fixed, or that is odd. It is not. You know, what
are you doing --
Senator Warren. I think what you are talking about is
accountability?
Mr. Norquist. It is accountability, yes.
But there is an up side to that which is you know there
will be someone who cares enough to come back and say you fixed
it, well done, and so you will get to see that.
The other part is there is an exposure. There are people
who have been auditors before. What I found at DHS when I
showed up is there was one person in my organization who I knew
had been an auditor before, and their reaction to every meeting
was completely different. The staff would sort of get taken
aback and a little bit offended by the exchange, and you would
have the healthy body language when you are meeting with your
auditor. This gentleman--he is an exceptionally good gentleman,
Mike Weckler--would take me aside and say, boss, they have to
do this. That is the audit structure. They are going to ask the
same questions, and frankly they are going to ask you the same
set of questions next year we should have the answers for when
they show up.
We started hiring a couple people with audit experience,
not a lot but just enough within the organization so that
people would understand the auditors follow standards. They ask
for certain things. There is an expectation. Also there is a
way of dealing with them when there is an alternative solution.
If you have been an auditor, you can go back to them and say I
am going to do it this way instead. Oh, that is okay. That is
acceptable under the audit standard.
There is training you need for professionalization, and
there is a mix of bringing in folks with that other perspective
that really helps shift the culture of the organization.
Senator Warren. Thank you very much. I think this Committee
stands ready to provide you with any additional tools you may
need or incentivizes you may need to help move this along
faster.
But I want to thank all three of you for your willingness
to serve.
Thank you, Mr. Chairman.
Mr. Norquist. I appreciate that, Senator. We will need all
of those.
Senator Warren. Let us know.
Senator Reed. On behalf of the Chairman, Senator
Blumenthal.
Senator Blumenthal. Thanks, Mr. Chairman.
I want to focus on some of the unseen costs or less visible
costs of shipbuilding. As you know, the Navy's 2016 force
structure assessment reemphasized the priority of undersea
warfare capabilities focusing especially on our attack
submarines. One of the most common questions I am asked by the
Pentagon is about the industrial base, whether we will have
sufficient skilled and trained workers to build submarines at
the rate of 2-a-year. The accelerated fleet plan supports three
additional Virginia submarines, one more in fiscal year 2021,
2022, and 2023, respectively, to ensure that we move as quickly
as possible toward the goal of 66 submarines from the present
48.
I would like to ask all of you in terms of assessing the
costs and the capabilities of this country, do you agree that
we need to assure a stable, healthy industrial base as we
modernize our military and that the assessment of cost should
include some kind of measure of whether the pace of work will
maintain that industrial base? Because as you know, you cannot
just let people go and call them back, turn the spigot on and
off. People have lives. They are going to go do something else.
We are talking about people who are very capable of doing other
things with their lives, and they need to do other things with
their lives if they are not going to be employed for a period
of time. Training those people, maintaining the workforce is a
major challenge for our military contractors, particularly
Electric Boat and our submarine contractors and, equally so,
our subcontractors, the supply chain throughout Connecticut and
the country.
I am asking you this question because it is very much on my
mind as Electric Boat is, just to give you one example, now
working on maintenance of the Montpelier, an existing
submarine. That work will end sometime in probably 2017, and
then there will be a lag before the USS Boise potentially could
be in for overhaul as it needs to do because it cannot submerge
right now. That gap will be there on maintenance operations.
Should we not worry about accelerating work on the Boise on
its maintenance and overhaul so that we move that workforce to
the Boise rather than have the lag or gap in between and
thereby potentially lose some of that workforce? I realize it
is a longwinded question, but I would like your general
thoughts about it.
Mr. Daigle. Senator, I agree that workforce implications
should absolutely be part of both the Department's investment
strategies and its cost estimates related to those programs.
Mr. Norquist. I think the point you made is essential,
Senator. The amount of investment that it takes to be able to
have the capacity to make a Virginia-class submarine is
complex. If you were to decide to not buy them for 2 years, you
cannot buy six the next year. You cannot buy any. One of the
advantages I think of the Department's 6-year plan is you lay
out how many of each capability--say submarines--you wanted to
have at the end of a period of time, but then as you figure out
the rate at which you are buying them, you can pay attention
particularly to these types of industrial base issues and
challenges. They will vary by technology, but it is an
essential part of having a successful multiyear strategy.
Ms. McCusker. Senator, I am familiar, to a degree, on the
work that the Department has done to really look at the
industrial base and to try to do a better job of predicting
what our decision-making will do over time and give a little
bit more predictability in there. I think, if confirmed, I
would really be looking at this from a resourcing perspective,
and so working with AT&L and others, what are the resourcing
implications that we need to take a look at in conjunction with
the results of the strategy reviews that are going on now will
have an impact potentially on those exact things in the future
as well. I think that is where I would definitely be coming
from if confirmed in this position.
Senator Blumenthal. Thank you each for your answers. Thank
you for your willingness to serve, and thank you to your
families as well. I look forward to working with you, assuming
that you are confirmed.
Thank you, Mr. Chairman.
Senator Reed. Thank you.
On behalf of the Chairman, Senator McCaskill, please.
Senator McCaskill. Thank you.
Congratulations and condolences to all three of you. You
have really hard jobs. I have worked closely with your
predecessors on a number of items, and I look forward to that
same working relationship with you.
One of my areas in the decade that I have served on this
Committee has been contracting. I continue to remain frustrated
over the lack of transparency on contracting especially as it
relates to contract services.
GAO put out a report. They have put out several reports on
this subject, but the latest one was--and I am a former
auditor. So I read all those GAO reports. I am used to this
body language. I got it a lot as an auditor. I get it a lot as
a Senator too.
The 2016 February report showed that between 2010 and 2015,
that no question DOD contracted for a lot more services than
products. I think, unfortunately, people around here when they
think of contracts, they think of us buying stuff instead of us
buying people. In 2014 alone, there was over $85 billion spent
on just contract services.
Now, previous audits have talked about how many of those
service contracts were for inherently governmental functions,
which of course there is a whole process you need to go through
if you are going to be hiring people to do inherently
governmental functions in a contract capacity.
I have said many times on this Committee before my father
peeled potatoes in World War II. I do not expect us to be using
our very expensively trained military, point-of-the-spear
personnel to be peeling potatoes ever again. I get that part.
But I am talking about over there in that building. I am
talking about layer upon layer of contract services.
The recommendations made by the GAO last year was
essentially that we need to have some transparency and
especially some kind of budget going forward. All of the
services should revise their programming guidance to collect on
how contracted services will be used to meet requirements
beyond the budget year into the FYDP [Future Years Defense
Plan]. DOD partially concurred with this, saying the volatility
of requirements in each budget cycle constrained the
Department's ability to accurately quantify service contract
requirements. You know, that dog doesn?t hunt because we have
been spending billions of dollars on contract services every
year. We have a look back and the GAO says you have the data
for a look forward. That is what I really want to focus on
today.
How can the Department best estimate what kind of service
contracts will be necessary in the future years? Why can we not
get a system in place where we are doing a better job? Because
if we do not know what that line item is, there is no way we
can do oversight on that line item. I think it has remained
kind of--you know, slide around because then we cannot say why
did it jump so much in this year. You guys know how the FYDP
works over there. It actually does have a constraining effect
on DOD and the branches as they look into the FYDP and what is
coming. If we had this number in the FYDP, I think it would
have a really positive impact on the budgeting process and
ultimately hopefully the auditing process.
Mr. Norquist?
Mr. Norquist. What I would say is I would start by looking
at some of the largest service contracts, the ones where there
is--either associated with maintenance of weapon systems or
something where you can directly associate the volume of
activity with the number of systems in inventory and its
maintenance schedule. Those provide some of the best out-year
predictions.
Other ones may be by capability. You may use services to
maintain roads and facilities on a base. Then you are funding
it by the function you are trying to perform. The actual vendor
who wins the contract is irrelevant. It may be different ones
at different points in time, but this is the amount of money we
will want to spend on maintaining facilities and
infrastructure. I think those allow you to look out multiple
years and be more than guessing. You can say, well, this
facility is expanding and therefore I will need additional
support or it is contracting. But the ability to reliably
project other than using inflation or some other generic
dramatically improves the quality of your out-year projection,
Senator.
Senator McCaskill. Would you get back to me and let me know
if this is something that you would be willing to prioritize
going forward? Because I think not doing it--I mean, listen, I
get a contingency, but we are not talking about contingencies
here. We are talking about service contracts like you said from
everything from repairing roads to providing jock air to fixing
the copy machine. You know, sometimes it is security services.
It is a variety of things.
I just think you all have been doing so much service
contracting for so long that it is time for us to have a better
look into the future so we can have a better handle on it. I
would like a commitment today that when you all are confirmed,
that this is something that will be discussed and talked about,
along with having that first audit where it is going to be
painful but it will be downhill from there.
Mr. Norquist. Senator, should I be confirmed, I commit to
working with my colleagues here as part of looking at the
planning and programming budget process to see how we can
address the issue you brought up.
Senator McCaskill. Thank you very much.
Thank you, Mr. Chairman.
Senator Reed. Thank you.
On behalf of Chairman McCain, Senator Kaine.
Senator Kaine. Thank you, Mr. Chair, and thanks to our
Committee Members.
Congratulations on your appointment.
When we got a budget deal last week, the President tweeted
out the next morning there might be a need for a good shutdown
of the Government in September. There has been an interesting
discussion with comments by the OMB Director about what a good
shutdown would be.
I want to ask you with respect to your own functions,
should you be confirmed. With respect to either the Comptroller
function or this cost assessment and program evaluation
function, would you see any good to the work that needs to be
done if the Government of the United States were to shut down
in September?
Mr. Norquist. Senator, there is a cost and disruption to
services whenever there is a shutdown. Absent a significant
policy change as a result of it, that is a challenge. It
depends on what the policy change is as to whether it is
beneficial. But from the point of view of the Comptroller, a
shutdown is disruptive.
Senator Kaine. The same on the cost assessment function?
Mr. Daigle. Agreed.
Senator Kaine. Let me broaden it beyond Comptroller and the
cost assessment and program evaluation function. With respect
to the national security and the defense of the United States,
which is the overall mission of everybody who works for the
SecDef [Secretary of Defense], can you see any good in a
shutdown of the Government of the United States?
Mr. Norquist. The disruption that you have in the
Comptroller function you would see similar things in all of the
military organizations and units that are affected by it. The
question would be what is the policy change that resulted from
it because otherwise there is just pain.
Senator Kaine. Same on the cost assessment function?
Mr. Daigle. Agreed. I would just add--go back to David's
point earlier. I think in particular the three people sitting
here would very much prefer stability in resourcing over the
next few years so that we can develop an investment strategy
and an investment plan for the Secretary and for the Department
of Defense.
Senator Kaine. Actually that is a very good point. I am a
former mayor and governor. I am kind of a certainty freak. I am
in a line of work where you do not necessarily always get
certainty. My general assessment is our governmental
professionals, as well as the outside private sector, can sort
of adjust around a certain outcome. Even if they do not like
the line item in the budget, they can kind of plan and adjust
around it. That is an awful lot easier than trying to adjust
around an asterisk where you do not know what the budget number
is going to be, you do not know if there are going to be
furloughs, you do not know if there is going to be a shutdown.
I think particularly in sort of Comptroller, cost assessment
and program evaluation, uncertainty has cost and our job should
be to try to reduce that uncertainty if at all possible. Would
you agree with that?
Mr. Norquist. Yes, absolutely. If you think about the
process that the three of us go through in support of the
Secretary, there is a look at what the national military
defense strategy needs to be, what the threats are, and what
size force we need out several years, what size Navy, what size
other things, and then you work back over 6 years paying
attention to the concerns the Senator made about the industrial
base and others. Am I increasing the size of the Army? How
much? How many can I bring on board per year? If you have a 6-
year idea of what your number is, you can do all sorts of
decision-making and planning, but if you only know next year's
number and then it may go back down again, well, you are not
going to increase the size of the Army easily because you do
not know if you can afford it the next year.
The benefits you get from multiyear planning depend on
having some reasonable confidence. I understand the world
changes and people are used to that. But the stability you
get--and when we have had periods of time where you have had
that stability, it has greatly facilitated acquisition. It has
facilitated planning. It has facilitated the types of tradeoffs
that you need.
Senator Kaine. Let me just follow up. Even just within a 1-
year cycle--as an example, we got a budget deal last week. I
believe that we easily could have gotten that exact deal in
December. We got it last week, and through the rest of the
year, we have that deal. But if we could have gotten that deal
in December or something like it and people would have had not
a full 12 months but at least 10 months to plan, that would
have made people's jobs a little bit easier to have that degree
of certainty and not have to wait till April to find out what
the answer was. Would you agree with that?
Mr. Norquist. Absolutely.
Senator Kaine. Let me ask one last question. I very much
support the CAPE office. I think it is a really important one
to go in and look at program decisions and see whether the
costs or the program evaluations were right or wrong. Program
officers I think have a bias toward optimism because they want
to get the program done, and sometimes that bias also is toward
underselling what the costs might be or making at least
favorable assumptions on cost. You guys come in and then you
are going to give the straight story. They are kind of the
accelerator and you are kind of the brake, and hopefully you
would then your best practices and that would inform things.
Is there a way to build within the program office a little
bit of a CAPE mentality or kind of a red team approach that
while things are happening, there could be an effort to counter
what I think would be almost a natural institutional bias
toward optimism in a program office and put in some of the real
tough kind of number crunching analysis that you guys do? It is
not just after the fact.
Mr. Daigle. Senator, I think that is ongoing in the
Department right now. Part of the implementation plan from the
acquisition reforms from last year, the Department is going
back and looking at how do we do requirements processes. How do
we come up with our acquisition strategies? My understanding is
part of that discussion is building cross-functional teams
upfront in an acquisition program to bring the various points
of view together, greater collaboration between, say, CAPE and
the Services in the requirements generation process itself so
that those multiple points of view come forward much sooner
rather than everybody operating in their own individual
stovepipe.
Senator Kaine. Great, great. Thank you very much.
Thanks, Mr. Chair.
Chairman Reed. Thank you, Senator Kaine.
Thank you all for your very thoughtful answers and for your
dedicated service in so many different ways. We thank your
families for being here.
On behalf of Chairman McCain, let me adjourn the hearing.
Thank you very much.
[Whereupon, at 3:54 p.m., the Committee adjourned.]
------
[Prepared questions submitted to Ms. Elaine A. McCusker by
Chairman McCain prior to the hearing with answers supplied
follow:]
Questions and Responses
department of defense reforms
Question. The National Defense Authorization Act for Fiscal Year
2017 included the most sweeping reforms since the Goldwater-Nichols
Department of Defense Reorganization Act of 1986.
Do you support these reforms?
Answer. Yes.
Question. What other areas for defense reform do you believe might
be appropriate for this Committee to address?
Answer. I have no specific recommendations at this time. If
confirmed, I expect to actively participate in the Department's reform
effort and will support any requests to Congress that result.
duties
Question. What is your understanding of the duties and functions of
the Principal Deputy Under Secretary of Defense (Comptroller)? How will
you prioritize them?
Answer. My understanding is that the Under Secretary of Defense
(Comptroller) is the senior advisor to, and action officer for, the
Deputy Secretary and Secretary on financial, resourcing and budget
matters. If confirmed, I would directly support the Comptroller, Deputy
Secretary and Secretary in working across the Department to legally,
responsibly and accountably resource and execute the Defense Strategy.
Specifically, I would provide Principal Deputy level support for
overseeing the financial management activities of the Department,
developing and maintaining integrated agency accounting and financial
management systems, supervising and directing preparation of DOD budget
estimates, monitoring financial execution, overseeing preparation and
submission of financial statements, and supporting the recruitment and
training of the financial management workforce.
I would prioritize my duties and functions in close collaboration
with the Comptroller to respond to urgent requirements, prepare and
justify the budget to maintain adequate and uninterrupted resources in
support of the Department's mission, support financial statement audits
and associated improvements, and participate in analysis and reviews to
inform discussions on the Department's future budgets.
Question. What recommendations, if any, do you have for changes in
the duties and functions of the Principal Deputy Under Secretary of
Defense (Comptroller)?
Answer. None at this time.
Question. How do you believe your role and tasks as Principal
Deputy Under Secretary of Defense (Comptroller) will differ from the
Under Secretary of Defense (Comptroller)? How will they overlap?
Answer. The Principal Deputy Undersecretary of Defense
(Comptroller) is the primary advisor to the Under Secretary of Defense
(Comptroller). If confirmed, I will work closely with the Comptroller
on the most appropriate division of tasks and will apply my skills and
experience to back up and represent the Comptroller in all duties and
responsibilities.
qualifications
Question. Section 137a of title 10 describes the Principal Deputy
Under Secretaries of Defense as first assistants to the Under
Secretaries of Defense and will assist Under Secretaries in the
performance of their duties. The duties of the Under Secretary of
Defense (Comptroller) are set forth in section 135 of title 10, United
States Code, and in DOD Directive 5118.03. Among the duties prescribed
are advising and assisting the Secretary of Defense in the preparation
of budget estimates, establishing and supervising the execution of
policies as it pertains to budget preparation, budget execution, and
accounting, and reporting of Department of Defense funds.
What background and experience do you possess that qualify you to
perform each of these individual responsibilities?
Answer. I have more than 20 years of experience and a diverse skill
set that, if confirmed, I will apply to the fundamental, routine,
episodic and emergent duties and responsibilities of the Comptroller to
ensure legal, ethical, accountable fiscal policy, financial management,
budget development and justification, execution and reporting of the
tax payer resources entrusted to the Department of Defense.
In each of my last four positions I have worked in direct support
of our national security from various perspectives that have
increasingly built my knowledge of the Department's budget and fiscal
management processes. My experience includes the outside-in perspective
as a Professional Staff Member (PSM) on the Senate Armed Services
Committee and the inside-out perspective from leadership positions
within the Department.
As a PSM on the Senate Armed Services Committee I acquired
invaluable insight into the annual authorization and appropriations
processes, a keen appreciation for the critical relationship between
the Department and its oversight committees, and a quality of
experience in the intricacies of the legislative process and
Departmental reporting requirements.
As a special assistant to the Assistant Secretary of the Navy for
Research, Development and Acquisition, I synchronized one of the
largest DOD acquisition programs at the time - the Joint Mine Resistant
Ambush Protected Vehicle program - where I gained critical experience
and contacts on the budgeting, execution, reporting and management of a
large, joint contingency program and also the intangible, yet critical,
relationships and organizational education to fully and effectively
utilize the Department's processes.
As Deputy Director for Operations in the OSDC Program/Budget
Directorate, I was afforded the opportunity to really hone my knowledge
and experience of the Department's budget development and supervision
of execution policies while also gaining substantial experience in the
contingency funding aspect of the Department's business. I developed an
initial understanding of the other Comptroller divisions and, if
confirmed, will augment my ability to support the full array of the
duties performed by the CFO.
My current role, as Director of Resources and Analysis at U.S.
Central Command, solidified my professional experience in preparation
for the Deputy Comptroller role as I led detailed analysis and
assessments in support of resourcing discussions, developed and
executed the annual headquarters budget, participated in the
Department's annual Program/Budget Review, prepared contingency budget
assumptions for costing by the Services, and partnered with components
and Services on policies and reporting for special contingency fund
activities executed by CENTCOM components and task forces. I am the
senior advisor to the Commander on all matters related to programming,
budget, financial management, campaign assessments, modeling and
simulation, wargaming, decision support analysis, requirements and
capability gaps definition, resourcing, and science and technology.
If confirmed I will bring my program and financial management
experience, analytical and leadership skills and aggressive diligence
to performing the full array of Deputy Comptroller duties, attacking
the Department's resource challenges and pursuing legal, ethical and
accountable funds execution and reporting.
Question. Have you participated in the audit of a large, complex
public or private sector institution?
Answer. I have been involved in numerous performance audits
associated with contingency operations and programs and perform the
annual statement of assurance for U.S. Central Command under the
Managers Internal Control Program. While I have an appreciation of the
challenges and complexity, I have not participated in a large, complex
financial audit of a public or private sector institution.
Question. What formal education have you had in financial
management or auditing?
Answer. I have substantial informal and on-the-job training in
Planning, Programming, Budgeting and Execution (PPBE), managing the
functions and activities of a financial management workforce, and
developing guidance for contingency program execution and reporting. I
have applied financial management principles in a number of program and
organizational management positions including, most recently, with a
particular emphasis on contingency funds. In my current capacity, I
directly oversee the CENTCOM Comptroller and financial management
division, providing guidance, leadership and counsel in the practical
application of accounting standards as they apply to my duties as the
senior advisor to the Commander on all matters related to financial
management.
Question. Do you believe that there are any steps that you need to
take to enhance your expertise to perform these duties?
Answer. If confirmed, I will further target my continual education
and training to ramp up my expertise in the interface, capabilities and
challenges of the Department's financial systems, operations and
reporting.
Question. If confirmed, which of these roles and duties do you
believe will be particularly challenging to you based on your own
professional experience?
My focus in the financial management domain has been on Comptroller
functions and program/budget processes to date and while, if confirmed,
I expect an initial learning curve on the audit, I think my diverse and
broad professional experience will allow me to effectively add
increasing value to this challenge as well.
relations with congress
Question. What are your views on the state of the relationship
between the Principal Deputy Under Secretary of Defense (Comptroller)
and the Senate Armed Services Committee in particular, and with the
Congress in general?
Answer. I don't have specific information on the relationship
between the Principal Deputy Comptroller and the Committee and
Congress, but I think there is always room for improvement. If
confirmed, I would work to improve the relationship.
Question. If confirmed, what actions would you take to sustain a
productive and mutually beneficial relationship between the Congress
and the Office of the Under Secretary of Defense (Comptroller)?
Answer. If confirmed, I will approach the Congress as a partner. I
would promote frequent, open collaboration and information exchanges
both formal and informal.
audit and financial management
Question. The Department of Defense is the only federal agency
unable to complete a financial audit in accordance with the law,
despite having invested billions over the past 16 years to do so. The
persistent lack of accountability by Department leadership for results
leads to concerns within the Congress and in the public over the
stewardship of Department funds and the qualifications of the people
entrusted to lead the Department in its audit efforts. It is not simply
an abstract statutory requirement that the Department produce auditable
financial statements showing where and how it spends its annual
budget--the accuracy of the financial information underlying the
financial statements is critical to the Department's ability to develop
an adequate defense budget and make important financial decisions in an
environment where every defense dollar counts.
Do you commit to meeting the upcoming statutory audit deadlines
requiring that the Department's financial statements be ready for audit
by September 30, 2017, and that the audit of the fiscal year 2018
financial statements be completed by March 31, 2019?
Answer. If confirmed, I commit to doing everything within my
authority to facilitate starting the audit as soon as possible and to
supporting the Department in achieving the referenced deadlines and
completion of the fiscal year 2018 financial statement audit by March
31, 2019.
Question. When will the Department achieve a clean audit opinion?
Answer. From what I understand, currently we have insufficient
information to predict achievement of a clean audit opinion. We will
need to use audit findings to develop and implement corrective action
plans and pursue an enterprise-wide strategy of consistent progress to
the goal of achieving and maintaining a clean audit.
Question. Will you be prepared to meet with Members of this
Committee every quarter until this happens?
Answer. Yes. If confirmed, I will support regular engagements and
will appreciate the Committee's attention and assistance.
Question. Describe your knowledge of accounting and financial
management principles, give specific examples of how you have applied
this knowledge in previous positions, and explain how your experience
qualifies you to be the Principal Deputy Under Secretary of Defense
(Comptroller).
Answer. I have applied financial management principles in a number
of oversight, program and organizational management positions with a
focus on: analytical support to resource discussions and decisions;
participation in the Planning, Programming, Budgeting and Execution
(PPBE) process; annual execution of the Manager's Internal Control
Program (MICP); and flexible, accountable, contingency funds policies,
processes, and management.
Question. As Deputy Director, Operations in the Program/Budget
Directorate of the Office of the Under Secretary of Defense
(Comptroller) I partnered closely with CAPE to conduct the annual
Program/Budget Review (PBR). This review included real-world use of
critical PPBE principles including: application of national interest
criteria, transparent analysis of alternatives, objective evaluation of
requirements, assessment of cost estimates, and feasibility of
execution. I interacted with fiscal lawyers on the practical
application of financial management principles to address year of
execution emerging requirements and authority questions. I also worked
closely with the Comptroller accounting personnel during my time in
OSDC on the establishment of new contingency funds and processes to
facilitate accountability and audits.
Answer. In my current capacity as Director, Resources and Analysis,
I am the senior advisor to the commander on all matters related to
financial management. I operationalized the PBR and PPBE principles by
employing a robust filter process for development of our annual
capability gap, POM and PBR submissions. I also directly oversee the
CENTCOM Comptroller and financial management division. I provide
guidance, leadership and counsel in the practical application of
accounting standards in the headquarters.
I believe my knowledge and experience provides a useful set of
qualifications for the current and future roles, responsibilities,
duties and challenges facing the Principal Deputy Under Secretary of
Defense (Comptroller).
Describe your previous experience leading large-scale change
initiatives in complex organizations.
When I joined the Mine Resistance Ambush Protected (MRAP) Vehicle
program, it was in the initial stages of embarking on an effort that
would become one of the Department's largest joint acquisition
programs. It was charged with developing, building, testing, equipping,
transporting and sustaining a new design of explosive protected vehicle
in an Active combat zone. Two of the key duties I performed for the
program can be summed up as aggressive, creative trouble-shooting and
constant, tailored communications - functions that I believe are
critical to large scale positive change in any sizable and complex
organization.
In partnership with a core group of senior military and civilian
officials, I planned, facilitated and managed weekly synchronization
forums which were designed to bring acquisition, resourcing and legal
decision-makers together to discuss and mitigate challenges and
barriers to program success. I established strong, open communications
with all elements of the team and developed a standard set of updates
for senior leaders to quickly convey key program data and decision
points. The result was a rapid mobilization of the industrial base,
innovative use of a flexible acquisition system, a successful
resourcing strategy, and deploying 1500 vehicles to the field in the
first 15 months of the program.
I have used the same skills and similar approaches in subsequent
large scale initiatives, including development and utilization of
modeling and simulation to improve campaign planning and leadership of
a complex organization through a difficult and uncertain financial
environment. Leading up to the civilian furlough that resulted from
Sequestration, I conducted frequent forums, including two command-wide
civilian town hall meetings, to mitigate personal and professional
impacts. Due to our open approach and informed by technical expertise
we continued uninterrupted support of many response and planning
activities.
I believe these same principles of open communication, leveraging
technical expertise and creativity, and collaboration in identifying
and addressing challenges directly apply to the priorities and tasks
currently facing the Under Secretary of Defense (Comptroller) and the
Principal Deputy.
Question. What is your assessment of the Department's efforts to
achieve a clean financial statement audit to date? What specific
changes will you make to its approach?
Answer. My understanding of the progress to date includes several
agencies that are under full audit with clean opinions and preparation
activities by the Military Services to begin the audit. The Department
also now has a strong leadership emphasis on the audit and a clearer
sense of systemic challenges and barriers that must be overcome. If
confirmed, I will support efforts to start the full audit and further
assess changes to the approach.
Question. What actions will you take to link financial information
to performance measurement and monitoring mechanisms to enable improved
decision making about the Department's investments?
Answer. As the Department receives audit findings and pursues
remediation actions, I believe we will have a better sense of the links
and gaps in financial and performance systems. The Department may also
have a clearer view of the current capability of its systems to
generate analytical reports to better inform decision-making. The
ability of data systems to link and generate useful analytical reports
is a particular interest and, if confirmed, I will examine the linkages
available in our systems to determine what improvements are required.
Question. Will you commit to a review of the Department of
Defense's financial operations structure, to include an independent
assessment of finance and auditing practices and organizations in the
Department of Defense and how other federal agencies, which maintain
clean audit opinions, successfully use modern financial systems of the
Department of Treasury for non-military-unique financial transactions,
accounting, and reporting?
Answer. I believe it is good practice to understand and leverage
best practices of other agencies and I understand the current
Comptroller team regularly consults with Treasury. However, prior to
making a commitment to an independent assessment, I would need to
better understand how such an assessment could be structured to yield
findings not currently expected from the financial statement audit or
from ongoing consultations. If confirmed, I will look into this
further.
Question. The Defense Contract Audit Agency (DCAA) performs a
variety of audit services that support the Department in awarding,
administering, and overseeing contracts, to include auditing costs
incurred under government contracts. DCAA also provides these services
to other federal agencies and departments. In response to increased
demand for such services, an intergovernmental working group conducted
market research on these services, which found that private sector
companies offer pricing for these services that competes with DCAA's in
some cases.
What are your views on whether and under what conditions the
private sector might perform these services?
Answer. I am not familiar with the intergovernmental working group
market research but generally hold the view that competition to provide
services is beneficial. If confirmed, I would like to review the
findings to determine what audit process would best serve the
Department and tax payer prior to providing any specific views in
response to this question.
Question. Which auditing services may be inappropriate for
outsourcing to for-profit industry concerns, and why?
Answer. If confirmed, I would examine this question further. I
would work with DCAA, the Services and Industry to determine the best
approach and the correct balance between inherently governmental roles
and responsibilities and potential out-sourcing opportunities.
Question. What is the appropriate role for DCAA?
Answer. My understanding is that DCAA is the Department's expert in
cost accounting and applying the Federal Acquisition Regulations for
auditing contractor data and records and payments to ensure they are
allowable, allocable, and reasonable. DCAA advises contracting officers
and provides assistance to achieve fair and reasonable contract prices.
Question. What have been some of the successes (especially in terms
of savings to the Defense Department and the taxpayer) from the work of
DCAA?
Answer. I understand DCAA has returned substantial savings to the
Department and taxpayer due to its role in advising contracting
officers through audits of forward pricing proposals and assisting
contracting officers during negotiations.
Question. Do you believe that Defense Finance and Accounting
Services and DCAA need to report to the Comptroller to operate
effectively or could they be moved elsewhere within the Department?
Answer. If confirmed, I would examine this issue further. However,
I do not believe DCAA has to report to the Comptroller to maintain its
independence. But, an assessment should be performed to ensure that a
different placement would result in desired benefits and not introduce
organizational or management barriers that impair DCAA's key functions.
I believe the DFAS should continue to report to the Comptroller to
work effectively. DFAS is the Secretary of Defense's operational arm of
Finance and Accounting which supports the core DOD missions. Moving
DFAS from the Comptroller would separate the financial management role
right at the time the Department needs a single, direct report to the
Secretary charged with carrying out these functions. Specific negative
impacts could include: disrupting operational command and control,
particularly important during emergency and disaster responses and in
providing the end-to-end financial process for the Department and
Military Services when operating under regular appropriations or during
continuing resolutions, and introducing jurisdictional obstacles that
could disrupt and delay the operational response in executing critical
DOD programs that DFAS leads. DFAS is also a critical element of the
Department's audit readiness strategy. Finally, moving DFAS could sever
critical links between DFAS and the CFO in the management and
attainment of that goal.
major challenges and priorities
Question. In your view, what are the major challenges confronting
the Office of the Under Secretary of Defense (Comptroller)?
Answer. I see three major challenges facing the USD (Comptroller),
and Principal Deputy, that are immediate and ongoing.
First, the Comptroller leadership must support the Secretary in
obtaining the resources necessary to rebuild the military. The DOD
Comptroller, working with the entire enterprise and the Office of
Management and Budget, is faced with developing a resourcing strategy
which will meet Department priorities for readiness, modernization,
capacity and lethality. The Department's requests must be accompanied
by credible, justified budget documentation that are responsive to
Congress and that effectively connect strategy to resourcing in support
of current challenges and in preparing to prevail in the future.
Second, the audit. The USD (Comptroller) and Principal Deputy both
have critical leadership roles in solving any remaining barriers to
meeting the audit timeline and in aggressively pursuing an enterprise-
wide strategy to obtain and maintain a clean audit opinion.
Finally, the Comptroller and Principal Deputy must look ahead and
shape the Department's financial management workforce of the future. I
understand a lot of effort is ongoing on this challenge and, if
confirmed, I will work to support this very important element of the
Department's ability to maintain and improve trust and credibility in
the use of its resources while supporting the reform agenda.
Question. If confirmed, what plans do you have for addressing these
challenges?
Answer. If confirmed, my first action will be to get fully up to
speed on these challenges through immediate consultation with the USDC
staff experts and all relevant stakeholders. I would then work closely
with the DOD Comptroller to develop and implement a strategy and apply
our leadership and skills to address each one. Finally, I would employ
open collaboration with the Military Departments, Defense Agencies,
Office of Management and Budget and Congress to pursue solutions.
overseas contingency operations account
Question. The use of the Overseas Contingency Operations (OCO)
account has been hotly debated for several years. A primary reason for
this is the fact that OCO dollars are exempt from the caps of the
Budget Control Act (BCA).
What are your views about the use of the OCO account in the
Department of Defense's annual budgeting?
Answer. I believe submitting the OCO request on the same timeline
as the annual budget poses some challenges in projecting what are
inherently emerging operational requirements. But, it has also
generally worked well to provide more timely funding and increased
transparency, while reducing the consequences and risk associated with
covering contingency costs with base funding until supplemental
appropriations are available. I believe that the reduced defense
funding provided under the BCA caps has complicated the use of OCO, but
the Department is executing contingency operations and requires such
funding over the base budget to support ongoing and emergent
activities.
Question. OMB Director Mick Mulvaney has made public statements on
his desire to transfer all funding residing in the OCO account into the
base accounts. In a recent press article referring to OCO, he was
quoted as saying, ``It's past time to do away with the slush fund
entirely.''
Do you concur with Director Mulvaney's views on OCO?
Answer. Do you believe that the existing criteria governing OCO,
written by the OMB Director in 2010, and used to formulate the Defense
Department's budget request should be updated or amended? If so, how?
Question. Do you believe that some activities, like the European
Deterrence Initiative, which do not meet the existing OMB OCO criteria,
should remain in OCO?
Answer. I believe any transition of enduring requirements currently
funded in OCO will need a dollar for dollar increase in the base
budget. The OCO budget is developed under a set of criteria that is
flexible enough to support annual discussions, such as the one that
resulted in inclusion of the European Reassurance Initiative in the OCO
request. Though the Department does at times need to make changes as it
executes the OCO budget, I believe those changes also receive an
appropriate level of Congressional oversight. The OCO budget remains
critical to the execution of the Department's contingency operations.
The nature of the threat requires criteria unbound by geography and
more conducive to projected requirements. If confirmed, I look forward
to working with the Department leadership to support discussions with
OMB on the OCO criteria.
Question. The Bipartisan Budget Agreement of 2015 included some
base funding in OCO for fiscal years 2016 and 2017. Consequently, the
Defense Department's budget request for fiscal year 2017 included
approximately $5 billion in base funding in OCO.
Do you believe it is more important to get funding at your
requested levels, even if it is in OCO?
Answer. Yes, though funding base budget requirements in OCO
inhibits effective planning and reduces transparency on the real cost
of the defense strategy.
Question. Or would you prefer a more stringent adherence to the OCO
criteria, even at the cost of not securing additional money?
Answer. I believe it is necessary to provide the Department with
requested funding levels and a sufficient top line to carry out the
defense strategy and to provide the predictability necessary for the
most effective planning and execution. Given a sufficient top line for
the base budget, OCO criteria could be adjusted to respond to the
nature of emerging contingency operations.
Question. The BCA remains in place until 2021. Both the Secretary
of Defense and the President have stated the need to repeal the
``defense sequester.''
What are your views on how the BCA impacts the military? Should the
BCA be amended or repealed?
Answer. As Secretary of Defense Mattis noted in testimony, the BCA
caps have hurt military readiness and long-term capability to defend
the country. I support the position of the President and the Secretary
that the BCA caps should be repealed.
Question. If you believe the BCA should be amended or repealed, how
will you prioritize that effort with your other duties, if confirmed?
Answer. I will support the leadership of the Department and
Administration in continuing to convey the immediate, near, mid and
long term consequences of the BCA and that its caps should be repealed.
personnel costs
Question. The growing cost of military personnel hampers the
Department of Defense's ability to confront future worldwide threats. A
large portion of the military compensation package consists of in-kind
benefits--health care, housing, tax-free shopping in military
exchanges, and taxpayer subsidized commissaries. The total costs to
provide these benefits are rapidly growing, even as personnel end
strengths have been reduced. In fiscal year 2016, the military health
system consumed about $1 of every $12 in the defense budget.
Should the Defense Department's personnel costs grow at the rate of
inflation? Or should the topline defense budget adjust to match the
growth in personnel compensation and in-kind benefit costs?
Answer. The Department's top line budget should reflect the
resources necessary to defend the nation, maintain a technological
edge, preserve the health of the joint force and provide options.
base realignment and closure (brac)
Question. Do you believe another BRAC round is necessary? If so,
why?
Answer. I understand previous BRAC rounds have resulted in cost
savings and that the Department may have additional excess capacity,
but I would need to investigate the details, informed by the
Department's strategy review, prior to stating an opinion on the
necessity of another round. If confirmed, I will work with the
Department leadership to support analysis and a recommendation on this
matter.
Question. It has been noted that the 2005 BRAC round resulted in
major and unanticipated implementation costs and saved far less money
than originally estimated.
What is your understanding of why such cost growth and lower
realized savings have occurred?
How do you believe such issues could be addressed in a future BRAC
round?
Answer. It is my understanding that the 2005 BRAC round attempted
both efficiency and transformational efforts simultaneously which
resulted in lower overall savings. If confirmed, and if Congress
authorizes another BRAC round, I will work with the appropriate
organizations within DOD on improvements to cost and savings estimates.
internal budgeting practices
Question. Many accuse the federal agencies of executing budgets
with a ``spend it or lose it'' mentality when it comes to obligating
funds. Do you believe that is a problem in the Department of Defense?
If so, how would you address it?
Answer. Spending should be based on validated requirements. I
believe a perception of rushed execution may result from the late
appropriation of funds and the acceleration of spend plans to
compensate for low and incremental funding during continuing
resolutions. I am not currently aware of any actual practice of
imprudent spending. But, if I am confirmed, I will look into it. I
believe any mentality toward such spending could be easily addressed
through leadership guidance and mechanisms to reward common sense and
diligent execution.
Question. Do you believe the Department should have some level of a
carryover authority, particularly given the frequency by which the
Department operates under a continuing resolution?
Answer. Such authority could be a useful mechanism to apply carry-
over resources to the first quarter which might also mitigate the
disruption and inefficiency caused by continuing resolutions.
Question. What are your opinions on the reprogramming process? What
do you believe should be the considerations that govern how the
Department uses this process?
Answer. It has been my experience that the Department's
reprogramming process employs a fairly rigorous, multi-tiered review to
identify sources for emerging priorities and unexpected changes to
program execution and requirements. The Department does not execute
requested changes until congressional approvals are obtained. If
confirmed, I will examine the process further, but it appears that the
Department already uses appropriate governing considerations.
The Department of Defense is requesting growth in the budget to
improve critical capabilities to deal with growing threats around the
world. In years past, the Department included items in the budget
request that were not as critical to supporting the mission of the
military, while leaving high priority items unfunded.
Question. How will you manage the budget process to ensure that
funding is going to the highest set of priorities throughout the entire
budget? And that each of the services are funding the highest set of
priorities and that risk is evenly distributed amongst the services?
Answer. It is my observation that the Department's budget process,
conducted in partnership with the program review, is designed to
support sufficient analysis and enterprise-wide discussion of strategy,
priorities and resourcing to implement the Secretary's guidance and
inform decision-making. If confirmed, I will work with my counterparts
across the Department to ensure the highest priorities are funded and
to highlight to senior leadership areas that may be out of compliance
with the Secretary's priorities.
Question. Do you believe the Department's Planning, Programming,
Budgeting, and Execution process needs to be reformed? If so, how?
Answer. I believe the Department's Planning, Programming, Budgeting
and Execution process works well. However, if I am confirmed, I will
examine if any changes are warranted.
Question. Do you believe there should be an independent assessment
of the efficiency and effectiveness of these processes?
Answer. At this point, I think the Department experts are in the
best position to evaluate the efficiency and effectiveness of the
process and advise the Deputy and Secretary of any improvements.
Question. What flexibility needs to be incorporated into Defense
Department policies and regulations to allow for more agile programming
and budgeting to help the Department take advantage of emerging
technologies or deal with emerging threats?
Answer. I am not currently aware of additional flexibility required
to increase agility to leverage emerging technologies or address
emerging threats. If confirmed, I would be happy to look into this
issue further.
Question. What new authorities or legislative changes would allow
the Defense Department to more effectively execute needed acquisition
and management reform initiatives?
Answer. I understand the Department is currently studying the
legislative changes in the Fiscal Year 2017 NDAA and is embarking on a
reform effort in support of the government-wide comprehensive plan. I
am not aware of additional legislative changes currently required.
comptroller personnel and business processes
Question. What steps will you take to improve the quality of the
Defense Department's comptroller, auditing, and financial management
workforce?
Answer. I understand the Department embarked on an effort to
improve the quality of the comptroller, audit and financial management
workforce as part of the Financial Improvement and Audit Readiness
effort. Prior to being able to outline specific steps to improve this
ongoing effort, if confirmed, I would need to examine current
enterprise-wide progress and any gaps or acceleration options.
Question. What new business processes will you implement to improve
the effectiveness and efficiency of comptroller functions and execution
of comptroller missions?
Answer. As I have been away from the Office of the Under Secretary
of Defense (Comptroller) for nearly 6 years, if confirmed, I would need
to study the current state of its business processes to provide an
informed response to this question.
Question. What steps will you take to ensure a continuous review of
these business processes for their efficacy and consistency with best
practices?
Answer. If confirmed, I will first review the current assessment
process for measuring the efficacy of the business processes. Then, I
will determine if changes to the frequency, scope or tracking of action
on recommendations is required.
congressional oversight
Question. In order to exercise its legislative and oversight
responsibilities, it is important that this Committee and other
appropriate committees of the Congress are able to receive testimony,
briefings, and other communications of information.
Do you agree, if confirmed for this position, to appear before this
Committee and other appropriate committees of the Congress?
Answer. Yes.
Question. Do you agree, if confirmed, to appear before this
Committee, or designated Members of this Committee, and provide
information, subject to appropriate and necessary security protection,
with respect to your responsibilities as the Principal Deputy Under
Secretary of Defense (Comptroller)?
Answer. Yes.
Question. Do you agree to ensure that testimony, briefings, and
other communications of information are provided to this Committee and
its staff and other appropriate committees in a timely manner?
Answer. Yes.
Question. Do you agree to provide documents, including copies of
electronic forms of communication, in a timely manner when requested by
a duly constituted committee, or to consult with the Committee
regarding the basis for any good faith delay or denial in providing
such documents?
Answer. Yes.
------
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator David Perdue
the demonstrated need for improved financial management
1. Senator Perdue. Ms. McCusker, the Marine Corps demonstrated that
for every $1 it spent on audit, it realized $3 in value from improved
financial controls. By the Marine Corps' account, their audit freed up
enough money in their budget to buy an additional cobra attack
helicopter, three M1A1 Abrams tanks, or 70 million additional rounds of
ammunition. Will you commit to leveraging the work the Marine Corps
already did to quantify the value of the audit efforts and apply
lessons learned across the Department?
Ms. McCusker. While I don't have specific familiarity at this point
on the value from improved financial controls demonstrated by the
Marine Corps, if confirmed, I will definitely work to apply lessons
learned across the Department.
2. Senator Perdue. Ms. McCusker, would you commit to updating
Congress on how much you're able to find by the time you come up to
talk about next year's budget request?
Ms. McCusker. If confirmed, I would be happy to research this issue
and provide an update to Congress.
defense contract audit agency--implementation of cost audits (by law)
3. Senator Perdue. Ms. McCusker, in the Fiscal Year 2017 National
Defense Authorization Act (NDAA), Congress told the Defense Contract
Audit Agency (DCAA) that in certain circumstances the organization is
to accept, without performing additional audits, the audit findings
prepared by a private sector auditor, so long as the audit followed
generally accepted accounting principles and relevant auditing
standards. Congress also authorized public accounting firms to assess
contractor business systems and to submit certified documentation that
relevant requirements are being followed. However, DCAA has not
implemented these new authorities, and has in fact pushed back against
them. Can you please commit that, if you are confirmed, you would
implement these and other statutory requirements?
Ms. McCusker. While I am familiar with requirements established by
Section 820 of the Fiscal Year 2017 National Defense Authorization Act
with regard to cost accounting standards and by Section 893 with regard
to business systems, I also know it can sometimes take time to develop
plans and guidance to implement such new statutory requirements. I am
not currently up to speed on DCAA concerns regarding implementation of
these new authorities. If confirmed, I will research this issue to
provide a thoughtful response. I will implement and adhere to the laws
passed by Congress. If there are concerns regarding implementation of a
provision of the law, I will work with relevant stakeholders and
Congress to address them appropriately.
__________
Questions Submitted by Senator Dan Sullivan
shifting the alaska cost vs location narrative
4. Senator Sullivan. Ms. McCusker, Alaska is traditionally viewed
as the most expensive CONUS [Continental United States] and least
forward OCONUS [Outside the Continental United States] location. This
``glass half-empty'' vantage point prevents the Department of Defense
(DOD) from capitalizing on the strategic location and resources in
Alaska. What is your opinion on this issue, and can I get your
commitment to approach Alaska with a ``glass half-full'' perspective as
the furthest CONUS and least-expensive OCONUS location?
Ms. McCusker. While I don't have enough information for a specific
opinion on this issue, I recognize Alaska's role in support of our
military strategy. If confirmed, I commit to taking into consideration
the perspective you have described.
fiscal year 2017 ndaa acquisition changes impact
5. Senator Sullivan. Ms. McCusker, considerable changes were made
to the acquisition process in the Fiscal Year 2017 NDAA. What effect
will this have on acquisition reform in respect to the office of the
Comptroller?
Ms. McCusker. While I am familiar with the changes to the
acquisition process that were made by the Fiscal Year 2017 NDAA, my
understanding is that the Department of Defense is developing
implementation plans for the changes. If confirmed, I will study this
issue further, particularly aspects related to the Comptroller's roles
and responsibilities, and would be happy to discuss this with you
further at a later date.
6. Senator Sullivan. Ms. McCusker, can you describe how these
changes will help or hinder your role?
Ms. McCusker. I am not currently privy to the specifics of the
Department's plans for implementing these changes, so I will need some
time, pending confirmation, to assess their impact. If confirmed, I
will study these changes and would be happy to discuss this with you at
a later date.
______
[The nomination reference of Ms. Elaine A. McCusker
follows:]
Nomination Reference and Report
As In Executive Session,
Senate of the United States,
April 24, 2017.
Ordered, That the following nomination be referred to the Committee
on Armed Services:
Elaine A. McCusker, of Virginia, to be a Principal Deputy Under
Secretary of Defense, vice John Conger.
______
[The biographical sketch of Ms. Elaine A. McCusker, which
was transmitted to the Committee at the time the nomination was
referred, follows:]
Biographical Sketch of Ms. Elaine A. McCusker
Education:
University of Dallas
- September 1987 to December 1989
- Bachelor of Arts, Political Philosophy
Employment Record:
U.S. Central Command
- Director, Resources and Analysis
- June 2011 to Present
Office of the Under Secretary of Defense, Comptroller
- Deputy Director, Operations
- January 2010 to May 2011
Office of the Under Secretary of Defense, Comptroller
- Associate Director, International Programs
- May 2008 to January 2010
Assistant Secretary of the Navy, Research, Development
and Acquisition
- Special Assistant
- January 2007 to May 2008
Senate Armed Services Committee
- Professional Staff Member
- January 2004 to January 2007
University of Washington
- Assistant Director, Federal Relations
- January 2000 to January 2004
Argonne National Laboratory
- Congressional/Federal Relations Liaison
- July 1994 to January 2000
Hesten Design Studio
- Office Manager
- August 1993 to July 1994
Foreign Policy Center/DeWeese Company
- Executive Director
- July 1990 to August 1993
Honors and Awards:
Department of Defense Medal for Distinguished Civilian
Service Award
Office of the Secretary of Defense Exceptional Civilian
Service Medal
Navy Superior Civilian Service Award
National Association of State Universities and Land
Grant Colleges Outstanding Achievement Award
______
[The Committee on Armed Services requires all individuals
nominated from civilian life by the President to positions
requiring the advice and consent of the Senate to complete a
form that details the biographical, financial, and other
information of the nominee. The form executed by Ms. Elaine A.
McCusker in connection with her nomination follows:]
[The nominee responded and the information is contained in
the Committee's executive files.]
------
[The nominee responded to Parts B-F of the Committee
questionnaire. The text of the questionnaire is set forth in
the Appendix to this volume. The nominee's answers to Parts B-F
are contained in the Committee's executive files.]
------
[The nomination of Ms. Elaine A. McCusker was reported to
the Senate by Chairman McCain on May 23, 2017, with the
recommendation that the nomination be confirmed. The nomination
was confirmed by the Senate on August 1, 2017.]
------
[Prepared questions submitted to Mr. Robert B. Daigle by
Chairman McCain prior to the hearing with answers supplied
follow:
Questions and Responses
department of defense reforms
Question. The National Defense Authorization Act for Fiscal Year
2017 included the most sweeping reforms since the Goldwater-Nichols
Department of Defense Reorganization Act of 1986.
Do you support these reforms?
Answer. Yes. I am familiar with these reforms from my time as a
member of the House Armed Services Committee staff and believe they
will encourage innovation and agility in DOD's acquisition system.
Question. What other areas for defense reform do you believe might
be appropriate for this Committee to address?
Answer. During the past 2 years, Congress has provided new
authorities for rapid prototyping and maturation of technology outside
of acquisition programs of record. I believe these reforms will help
DOD more quickly address emerging threats and take advantage of new
technological opportunities, while improving adherence to program cost
and schedule estimates.
duties
Question. What is your understanding of the duties and functions of
the Director of Cost Assessment and Program Evaluation?
Answer. I understand CAPE is responsible for providing unbiased
Independent Cost Estimates for all major acquisition programs; ensuring
that program cost and schedule estimates are properly prepared and
considered in DOD's deliberations on major acquisition programs;
providing guidance and oversight for Analyses of Alternatives (AoA) to
ensure that DOD considers the full range of program and non-materiel
solutions; and leading or participating in various other analyses to
inform DOD decisions. Additionally, the Director of CAPE is responsible
for leading the development of improved analytical skills and
competencies within the cost assessment and program evaluation
workforce of DOD. The Director also serves as a key advisor to the
Secretary and Deputy Secretary of Defense, especially for programmatic
development of DOD's Future Years Defense Program.
Question. What recommendations, if any, do you have for changes in
the duties and functions of the Director of Cost Assessment and Program
Evaluation, as set forth in section 139a of title 10, United States
Code, or in Department of Defense regulations pertaining to functions
of the Director of Cost Assessment and Program Evaluation?
Answer. At this time, I have no recommendations for changes in the
duties of the Director of CAPE. If confirmed, I would evaluate and
recommend to the Committee any modifications to such duties and
responsibilities that may be appropriate.
qualifications
Question. The Director of Cost Assessment and Program Evaluation is
the principal advisor to the Secretary of Defense and other senior
officials of the Department of Defense to provide independent analysis
and advice, ensure the cost estimation and cost analysis processes of
the Department of Defense provide accurate information and realistic
estimates of cost for the acquisition programs of the Department of
Defense, and execute other duties as directed by the Secretary of
Defense.
What background and experience do you have that you believe qualify
you for this position?
Answer. My career has been devoted to quantitative analysis,
including almost 10 years evaluating defense programs, budgets, and
costs. I worked for almost 6 years in CAPE, starting in the Cost
Assessment team evaluating manpower requirements, personnel costs, and
cost estimates of information technology programs. I served as the
Director's special assistant, conducting special projects and helping
manage the agenda for the Deputy Secretary of Defense's senior advisory
group. I then led CAPE's Program Resources and Information Systems
Management Division, which supports CAPE-wide data services, manages
the programming phase of the PPBE process, and produces the Future
Years Defense Program.
Currently, I lead Chairman Thornberry's defense reform team on the
House Armed Services Committee (HASC). I have worked collaboratively
with the Senate Armed Services Committee staff, Department of Defense
leadership, and other key stakeholders on the major acquisition reforms
that Congress has passed during the past 2 years. I joined HASC after 2
years as the Executive Director of the Military Compensation and
Retirement Modernization Commission, which in 2015 completed the most
thorough independent assessment of military compensation, retirement,
and quality of life programs in over 40 years. The Commission was
deemed to be highly successful, with Congress wholly or partially
adopting 13 of the Commission's 15 recommendations.
When not working for the Federal Government, I have conducted
quantitative analysis in the financial sector, primarily on performance
and risk measurement in support of state and local pension systems. I
have a Master of Arts in Security Studies from Georgetown University's
School of Foreign Service, a Masters of Business Administration from
Columbia Business School, and Bachelor of Arts degrees in Economics and
Mathematics from the University of Vermont. I served for 2 years in the
U.S. Army and was discharged honorably as an E-4 (a set of experiences
that continues to shape my policy work today).
major challenges and priorities
Question. If confirmed, what broad priorities will you establish?
Answer. If confirmed, my first priority as the Director of CAPE
would be to continue the tenet of providing independent and objective
analysis to support decision making by the Secretary and Deputy
Secretary of Defense.
If confirmed, my second priority would be to explore ways to
improve CAPE's process of developing cost estimates through information
technology and data management. For example, I understand that one
challenge to developing better estimates of operating and support costs
is availability of detailed maintenance cost data on legacy systems. In
support of these efforts, my third priority would be to strengthen
relationships throughout the Office of the Secretary of Defense (OSD),
the Joint Staff, the military departments, and Congressional oversight
committees. Last, but not least, CAPE comprises a team of highly
talented and experienced professionals. Supporting and maintaining this
talent must be a priority for the next CAPE Director.
Question. In your view, what are the major challenges, if any, you
would confront if confirmed as Director of Cost Assessment and Program
Evaluation?
Answer. DOD faces major challenges for increasing the lethality of
our force while recovering readiness strained during the last decade-
and-a-half of conflict. Meanwhile, nuclear modernization, missile
defense, space capabilities, cyber capabilities, and science and
technology investments represent competing demands for funds. The
primary challenge for the Director of CAPE will be to ensure the
Secretary and Deputy Secretary of Defense have a comprehensive set of
options for programs, investment profiles, and force structures that
are informed by independent, thorough, and insightful analysis.
Question. If confirmed, what management actions and timelines would
you establish to address these challenges?
Answer. Timelines to address these challenges will be compressed
because of the timelines related to the Fiscal Year 2018 President's
Budget and the fiscal year 2019 to 2023 programming cycle. If
confirmed, I would immediately review the results of the 60-day
readiness review directed by the President, and would participate in
the development of the new National Defense Strategy. Based on the
review and strategy, I would recommend changes to the fiscal year 2019
to 23 programming guidance, as necessary. I would then manage the
programming phase of the PPBE process to independently analyze Service
POM submissions to support Secretary of Defense resource decisions to
improve the capacity and lethality of the force.
relations with congress
Question. What are your views on the state of the relationship
between the Director of Cost Assessment and Program Evaluation and the
Senate Armed Services Committee in particular, and with the Congress in
general?
Answer. I believe the relationship between the Director of CAPE and
Congress in general and the Senate Armed Services Committee in
particular is good. Based on my experience at HASC, CAPE has productive
interactions with Congress and consistently provides insightful,
objective analysis. I would welcome the opportunity to continue to
strengthen these relationships should I be confirmed.
Question. Should the Director of Cost Assessment and Program
Evaluation be authorized to have more direct and independent
communications with the Congress, similar to the Director of
Operational Test and Evaluation?
Answer. Based on my experience, CAPE already has the authority to
have direct and frank communications with Congress, within appropriate
bounds of pre-decisional, proprietary, or otherwise classified
information. Mandating additional direct communications with Congress
may reduce the organization's overall effectiveness as a trusted,
independent advisor to the Secretary of Defense.
Question. If confirmed, what actions would you take to sustain a
productive and mutually beneficial relationship between the Congress
and the Director of Cost Assessment and Program Evaluation?
Answer. If confirmed, I would actively work to ensure a strong
relationship between CAPE and Congressional oversight committees. I
would ensure CAPE's staff responds to Congressional requests completely
and promptly, again within the bounds of pre-decisional, proprietary,
or otherwise classified information, and I would make the tracking of
these requests and responses a priority for the CAPE leadership and
front office staff.
defense funding and force sufficiency
Question. What specific recommendations would you provide the
Secretary of Defense to review and potentially reduce the size and
scope of the defense-wide and service accounts to maximize available
resources for the fielding of combat power?
Answer. I do not have any recommendations at this time. I
understand that CAPE has been actively involved with DOD's past several
rounds of efficiencies, but I have not had the opportunity to review
that work myself. If confirmed, I would review the processes and
methodologies used to date and make recommendations for improvements,
as appropriate.
strategy-based defense resource allocation
Question. Throughout the decade of the 1950s, and early into the
1960s, the Department of the Air Force received a disproportionately
higher share of the defense budget as compared to the other services
due to the development and fielding of expensive nuclear forces such as
ICBMs, bombers, fighters, and tankers, and the associated nuclear
command and control infrastructure. However, for the last several
decades, and notably since the 1986 Goldwater-Nichols Department of
Defense Reorganization Act, the services' annual base budgets remained
roughly proportional independent of significant changes in defense
strategy.
Do you believe the services should continue to receive
proportionate shares of the total defense budget irrespective of
changes in defense strategy?
Answer. Available resources should be allocated to the highest
strategic priorities, and the Service shares of the total defense
budget should be consistent with the defense strategy. If confirmed, I
would work to ensure DOD's resources are programmed accordingly.
Question. If the new administration emplaces a new National
Security Strategy and new National Defense Strategy that indicate a
need for disproportionate allocation of defense resources to one
service over another to successfully implement the strategy, will you
advocate for such disproportionality despite strong parochial service
views?
Answer. CAPE's role has always been to provide the Secretary of
Defense with a balanced defense budget that is aligned with strategy,
taking into consideration, but not captured by, Service views. If
confirmed, I would remain committed to this tradition.
Question. If confirmed, would you support a comprehensive roles and
missions review to effectively and efficiently provide appropriate
combat capability to our combatant commanders, while limiting redundant
capabilities to that required for military necessity?
Answer. Yes. If confirmed, I would support any review the Secretary
of Defense or the Congress directs.
department of defense planning, programming, budgeting, and execution
system
Question. The Department of Defense's Planning, Programming,
Budgeting, and Execution (PPBE) process was created in the 1960s by
Secretary of Defense Robert McNamara. While the process has undergone
some changes in the intervening decades, it remains essentially intact.
Do you believe the PPBE process needs to be reformed? If so, how?
Answer. I do not have any recommendations to reform the PPBE
process at this time. If confirmed, I would work with other
stakeholders to ensure that the PPBE process best supports the
efficient and effective allocation of taxpayer dollars to the highest
national security priorities of DOD.
Question. What flexibility needs to be incorporated into Defense
Department policies and regulations to allow for more agile programming
and budgeting to help the Department take advantage of emerging
technologies or deal with emerging threats?
Answer. I believe the acquisition reforms passed by Congress during
the past 2 years will help DOD take advantage of emerging technologies.
If confirmed, I would welcome the opportunity to help the Secretary of
Defense develop implementation guidance for those reforms.
Question. Prior to 2009, the PPBE system prescribed an alternate
year process for developing the Department's annual Program Objective
Memorandum (POM) that details the 5-year Future Years Defense Plan
(FYDP). This alternate year process mandated that only new start
programs and major resource allocation shifts be implemented in even
years of the POM, where odd years could only make limited changes to
the plan as an amended POM (APOM).
What are your views on the pros and cons of returning to a 2-year
alternating POM development process in the PPBE system?
Answer. In theory, a 2-year alternating POM development process
allows leadership to institutionalize decisions more fully by
preventing a zero-based reworking every year. However, it also
constrains opportunities to adapt to new situations and emergent
threats, concepts, and priorities, which is at odds with the need for
DOD acquisition to be more agile. In practice, based on my previous
experience at CAPE, the two-year alternating process is complicated to
implement and difficult to enforce.
Question. What changes should be made to the Congressional
authorization and appropriations process to create a system agile and
responsive enough to account for the fast-pace changes we are
experiencing in the global threat environment, as well as the rapid
pace of technological change?
Answer. I have no recommendations at this time. If confirmed I
would be happy to analyze this issue further and work with
Congressional defense committees to consider if changes would be
helpful.
cost assessment practices
Question. When formulating the independent cost estimate for the
Air Force's Ground Based Strategic Deterrent (GBSD) program to replace
the aging Minuteman III intercontinental ballistic missile fleet, the
Office of Cost Assessment and Program Evaluation (CAPE) provided a cost
estimate that was tens of billions of dollars higher than the Air
Force's service cost position. CAPE then modified its cost estimate to
reflect a range of total costs, ranging from a ``low'' estimate to a
``high'' estimate. The Under Secretary of Defense for Acquisitions,
Technology, and Logistics at the time, Frank Kendall, then directed the
acquisition program baseline to be funded at the CAPE ``low'' estimate,
rather than the higher independent cost estimate amount.
In your opinion, what factors caused the extreme difference in the
cost estimates calculated by CAPE, and the non-advocate cost assessment
reflected in the Air Force's service cost position?
Answer. I am not intimately familiar with this independent cost
estimate report. It is my understanding that differences between the
CAPE and Service cost estimates were primarily due to different
assumptions used by each office and a lack of comparable historical
data. This underscores the importance of collecting data, since future
cost estimates will be based on cost data collected today.
Question. Do you believe the decision to set the GBSD acquisition
program baseline, and therefore program funding, at the CAPE ``low''
estimate meets the spirit and intent of the 2009 Weapons System
Acquisition Reform Act requirement for major defense acquisition
programs to be funded at the higher of the independent cost estimate or
the service cost position?
Answer. It is my understanding the estimates in this unique case
were not bounds for potential costs for the program, but rather
illustrated the cost variance that resulted from changing key
assumptions. It is my understanding that the technical baseline for the
program to be acquired were not well known at the time of this
particular estimate, that comparability of historical cost data
therefore was difficult to determine, and that updated cost estimates
are expected after DOD has more refined technical details. I believe
that conducting objective cost estimates with the best available
information, then updating those cost estimates as data improves, is
consistent with the intent of WSARA.
Question. Would you recommend continuing the practice of
calculating cost estimate ``ranges'' as opposed to a set cost estimate
amount?
Answer. If confirmed, I would promote CAPE's standard practice of
calculating expected costs for a program and explaining risk factors
within that cost estimate.
Question. What actions would you take to increase the fidelity of
independent cost estimates for major defense acquisition programs?
Answer. CAPE policy should enforce consistent methodologies,
enhance risk analysis, identify roles and responsibilities, and improve
education and training for cost estimating across the weapon system
life cycle. Consistent cost estimating methods across departments,
coupled with a trained work force employing those methods, reduces
review time, reconciliation, and associated rework which can save
schedule time for acquisition programs and reduce costs. Furthermore,
up-front focus on data access, quality, and consistency improves both
the fidelity and timeliness of cost estimates. If confirmed, I would
also assess the potential for data standardization to enable
development and use of more automated cost estimating tools.
Question. Do you see any negative repercussions of requiring
program funding to be set at the higher of the independent cost
estimate or the service cost position?
Answer. Requiring program funding to be set at the higher of the
independent cost estimate or the service cost position can have
opportunity costs. While such a practice can in some cases reduce risk
for a given program, it also reduces funds available to other
procurement programs. This is a difficult tradeoff that is best left to
the judgement of the acquisition executive on a case-by-case basis.
program evaluation
Question. Section 139a(d)(5) of title 10, United States Code, makes
the Director of Cost Assessment and Program Evaluation responsible for
the ``Review, analysis, and evaluation of programs for executing
approved strategies and policies, ensuring that information on programs
is presented accurately and completely, and assessing the effect of
spending by the Department of Defense on the United States economy.''
Section 139a(d)(7) also makes the Director responsible for
``Assessments of alternative plans, programs, and policies with respect
to the acquisition programs of the Department of Defense.''
What is your view of the significance of independent review,
analysis, and evaluation of programs, and assessments of alternative
programs, to the effective management of the Department of Defense?
Answer. Independent analyses and evaluation of programs are
critical in identifying underlying risk in programs sometimes not seen
in the Service position--whether cost, schedule or performance risk. I
believe that identifying these risks and offering the means to mitigate
them best supports DOD leadership in making informed acquisition and
resourcing decisions.
Question. Do you see the need for any changes or improvements to
the organization, process, or methodology used by the Department for
such review, analysis, and assessments?
Answer. I am not aware of the need to make any changes or
improvements to the process or methodology at this time. It is possible
that additional decision support will be necessary, either via new
staff or a reorganization of missions within existing staff. If
confirmed, I would review the process and methodology and make
recommendations for improvements, as appropriate.
Question. In your view, does the Director of Cost Assessment and
Program Evaluation have the staffing, authority, access to information,
and resources needed to carry out this function?
Answer. If confirmed, I plan to evaluate the need for changes to
CAPE's staffing, authority, access to information, and resources in
order to fully comply with CAPE's statutory responsibilities.
Question. How do you believe that the Director of Cost Assessment
and Program Evaluation should interact with service acquisition
executives, program executive officers, program managers, and other
program officials in preparing independent evaluations of major defense
acquisition programs?
Answer. If confirmed, I would welcome the opportunity to build
strong, mutually-beneficial relationships with acquisition executives,
program managers, and other program officials. While it is important
for CAPE analyses to remain firmly independent and objective,
collaboration between CAPE and the military departments is the best
means of ensuring access to data and a broad understanding of
methodologies, assumptions, and alternatives.
Question. What role should the Director of Cost Assessment and
Program Evaluation play in assessing and evaluating management,
business, and organizational functions, initiatives, and activities
within the Defense Department?
Answer. Management, business, and organizational functions within
DOD are programs like any other, and it is the Director of CAPE's role
to assess whether those programs are funded consistent with the best
available information and the Secretary of Defense's guidance. In
addition, through CAPE's role as an independent analyst for the
Secretary of Defense, CAPE has in the past conducted analyses of cross-
cutting initiatives such as headquarters drawdowns and IT efficiencies
- and will likely be called on to do so again.
acquisition issues
Question. The National Defense Authorization Acts for Fiscal Years
2016 and 2017 made many changes to defense acquisition processes,
including reinserting service chief influence and accountability into
acquisition processes.
Do you support the acquisition reform provisions in these National
Defense Authorization Acts?
Answer. Yes. I believe they will foster innovation and agility in
DOD's acquisition system.
Question. What roles do you see for developmental planning,
prototyping, and experimentation for fielding of future defense
capabilities?
Answer. Prototyping can be an important mechanism to experiment
with new technologies before committing to long-term acquisition
programs of record. Such activities can also mature technologies
outside of programs of record, which in turn makes programs of record
more likely to meet cost, schedule, and performance goals. Coupled with
open systems architecture and developmental planning, prototyping
provides an engine of innovation to deploy capabilities to warfighters
quickly and to ensure that DOD weapon systems retain their
technological edge. If confirmed, I would look forward to working with
stakeholders across DOD to implement the innovation-supporting reforms
in the recent NDAAs.
Question. Do you agree the services should exploit non-
developmental or commercial off-the-shelf solutions to meet defense
requirements? Would this help put capabilities into the hands of our
warfighters more quickly?
Answer. Yes, when such COTS products meet military requirements,
they can quickly and cost-effectively put capabilities into the hands
of our warfighters.
Question. How can the Department better access and integrate
commercial and military technology to remain ahead of its potential
adversaries?
Answer. The new authorities for experimentation and rapid
prototyping that Congress has passed in the last 2 years will help DOD
better access and evaluate the military utility of commercial
technologies. Furthermore, non-traditional approaches like the
Strategic Capabilities Office, the Services' rapid capabilities
offices, and DIUx are highlighting the potential to rapidly integrate
new sources of commercial and military technology into defense systems.
If confirmed, I look forward to helping implement the new authorities,
as well as working with the non-traditional organizations and the new
Under Secretary for Research and Engineering, to identify additional
opportunities.
Question. What major shortfalls do you see in the Department's
ability to estimate program, development, procurement, and life-cycle
costs? What steps will you take to address these shortfalls?
Answer. I understand that the most significant shortfall in DOD's
ability to estimate costs is the availability of data on actual costs
incurred for programs as a basis for developing cost estimates. I
understand this to be particularly true as it relates to detailed
actual costs for operating and support of legacy systems. While CAPE
has consistently worked to improve the quality and timeliness of the
cost data, I understand there is still much to be accomplished. If
confirmed, I would continue to seek improvements in this area.
Question. What additional acquisition-related reforms do you
believe the Committee should consider?
Answer. I believe that Congress and DOD should consistently strive
to streamline processes, which includes periodic reviews of the
effectiveness of statutes, policies, and regulations. Establishment of
the Section 809 Panel on Streamlining and Codifying Acquisition is a
good first step, and I look forward to their recommendations.
acquisition process
Question. What is your understanding of the role of the Director of
Cost Assessment and Program Evaluation in the acquisition process?
Answer. It is my understanding that the Director of CAPE plays
multiple key roles in the acquisition process. The Director is
responsible for providing guidance and oversight for Analyses of
Alternatives to ensure that DOD considers the full range of program and
non-materiel alternatives that could provide the needed military
capabilities, as quickly as possible, at the lowest possible cost. The
Director is also responsible, throughout the entire acquisition
process, for ensuring that program cost and schedule estimates are
properly prepared and considered in DOD's deliberations on major
acquisition programs.
Question. What is your view of the significance of sound, unbiased
cost estimating throughout the acquisition process?
Answer. Independent, rigorous, unbiased cost and schedule
estimates, paired with thorough risk assessments, are essential for
effective acquisition decision making and oversight. Achieving the goal
of reducing cost and schedule growth in DOD's portfolio of acquisition
programs requires that good cost estimates be available and considered
throughout the acquisition process.
Question. What is your understanding of the role of the Director of
Cost Assessment and Program Evaluation in the requirements and
resource-allocation processes?
Answer. The Director is an advisor to the Joint Requirements
Oversight Council for assessing the resource requirements and
programmatic risk of a desired capability. The Director is the
principle advisor to the Secretary and Deputy Secretary of Defense for
the programming phase of the PPBE process and provides objective cost,
schedule, and performance analyses to inform resource tradeoff
decisions.
Question. Do you see the need for any additional processes or
mechanisms to ensure coordination between the budget, acquisition, and
requirements systems of the Department of Defense and ensure that
appropriate trade-offs are made between cost, schedule, and performance
requirements early in the acquisition process?
Answer. In the Fiscal Year 2017 NDAA, Congress passed legislation
requiring a new process to be co-chaired by the Deputy Secretary of
Defense and the Vice Chairman of the Joint Chiefs of Staff to establish
affordability goals and fielding targets for major defense acquisition
programs. If confirmed, I would welcome the opportunity to help
implement that provision, which will improve coordination early in the
acquisition process. Furthermore, the Director of CAPE currently works
closely with the DOD Comptroller, the Joint Staff, and the Under
Secretary of Defense for Acquisition, Technology, and Logistics to
ensure coordination between the budget, acquisition, and requirements
systems of DOD. If confirmed, I would continue to foster these
relationships.
Question. What role do you see for the Director of Cost Assessment
and Program Evaluation in controlling cost growth on the Department's
major defense acquisition programs?
Answer. From evaluating the sufficiency of Analyses of Alternatives
to conducting Independent Cost Estimates at major milestones or Nunn-
McCurdy breaches, the Director of CAPE is responsible for ensuring that
major defense acquisition programs are subject to rigorous independent
analysis. In addition, if confirmed, I would support a more continuous
involvement of CAPE in following and tracking program performance,
updating cost and schedule estimates, and evaluating new program risks
as they are identified.
financial management and auditability
Question. The Department of Defense and the services remain unable
to achieve a clean financial statement audit. The Department also
remains on the Government Accountability Office's list of high risk
agencies and management systems for financial management and weapon
system acquisition. Although audit-readiness has been a goal of the
Department for decades, it has repeatedly failed to meet numerous
congressionally directed audit-readiness deadlines.
What is your understanding and assessment of the Department of
Defense's efforts to achieve a clean financial statement audit?
Answer. While there is clearly more to accomplish, I am encouraged
by what I have observed in my role on the HASC. Recent efforts by
Comptroller have substantially enhanced emphasis and progress towards
this important requirement. Financial system modernization and
integration, as well as improved processes and procedures, have gone a
long way to moving closer to achieving this requirement.
Question. Especially for the purposes of cost control and program
evaluation, what benefits will accrue to the Department of Defense once
it is able to achieve and maintain a clean financial audit statement?
Answer. I understand that the primary goal of a clean audit is
improved financial management through better internal controls and
improvements to financial systems. However, audit readiness will
benefit DOD by providing more reliable and assured information on
whether programs are achieving objectives and outcomes and the cost for
achieving them. Further, it will support the goal of the PPBE process
by more tightly coupling or integrating accounting information into an
effective feedback loop for the next programming and budgeting cycle.
Question. If the Department of Defense improves its internal
controls and achieves a clean audit, do you expect it will help improve
the ability to control acquisition costs and estimate costs of
development, procurement, and sustainment of systems and services? Why?
Answer. Accurate and timely cost data are essential for the
development of thorough and timely cost estimates. Through improved
quality and visibility of program cost data, a clean audit therefore
will further DOD's ability to control acquisition costs.
Question. What impediments may hinder the Department's ability to
achieve a clean audit and how would CAPE help to address them?
Answer. Based on my experience, both in the public and private
sectors, I understand that the variety of data structures and systems
being used across DOD can be a potential impediment to achieving a
clean audit. If confirmed as the Director of CAPE, I would work to
implement and enforce enterprise-wide data structures to support an
audit, especially in cost reporting where CAPE has statutory authority.
Question. How can CAPE efforts to improve data collection and
analysis contribute to broader efforts to improve financial management
in the Department of Defense?
Answer. By improving availability and transparency of data, CAPE
can provide relevant stakeholders baseline facts, enabling the
assessment of long-term costs and performance of programs from a
common, consistent, agreed-upon basis. CAPE can also provide common
data structures to support analytic processes, which would help
integrate data from multiple DOD financial management systems.
data
Question. What is your assessment of the Defense Department's
ability to efficiently collect data on its systems and processes to
inform analysis and decision making?
Answer. It is my understanding that DOD's ability to collect data
on its systems and processes has been improving, although there is
certainly room for more work to be done.
Question. What initiatives will you undertake to improve the
Department's use of data in its processes?
Answer. If confirmed, I would work with the Deputy Chief Management
Officer (DCMO), Comptroller, and other stakeholders to develop,
maintain, and enforce enterprise-wide common data structures and
systems to enable better DOD-wide data analysis and reporting.
Question. What are the barriers that prevent the Department from
collecting the data it needs to analyze and improve its processes and
programs? How will you work to overcome those barriers?
Answer. DOD faces challenges with legacy data systems, inconsistent
data coding and tagging, and limited analytics resources. In some
cases, cultural barriers further restrict the free flow of data
throughout DOD. I understand that CAPE has had some success addressing
these challenges in cost reporting data, although there is still more
to be done. If confirmed, I would welcome the opportunity to work with
stakeholders across DOD to identify additional opportunities for
improvement in data transparency and consistency, as a building block
to development of more automated decision-making tools.
Question. In what areas do you feel that better use of data will
significantly improve the Department's mission execution or management
processes?
Answer. Better use of data can substantially improve almost any of
DOD's mission execution or management processes. For example, improved
collection and structuring of operating and support cost data would
improve CAPE's ability to produce quality and timely cost estimates. It
would also inform engineering tradeoff decisions early in the
acquisition process, as well as provide a feedback loop into DOD's
supply chain management processes. If confirmed, I would seek areas
that could quickly deliver results to DOD's mission execution or
management processes.
f-35 joint strike fighter
Question. The F-35 Joint Strike Fighter Program, the largest and
most expensive acquisition program in Department of Defense history,
was formally initiated as a program of record in 2001, and subsequently
adjusted to a total planned buy of 2,443 aircraft for the United
States. The program has not yet completed the System Development and
Demonstration (SDD) phase, now projected for an additional 7-month
delay and up to an additional $1 billion in cost overruns. The full
rate production decision is not due at least until 2019, 18 years after
its inception. At currently projected annual procurement rates, the
last delivery of F-35 variants is now planned for after 2040.
The Senate Armed Services Committee report accompanying S. 1376,
the National Defense Authorization Act for Fiscal Year 2016, required
the Secretary of Defense to assess the current requirement for the F-35
Joint Strike Fighter total program of record quantity, and then
revalidate that quantity or identify a new requirement for the total
number of F-35 aircraft the Department would ultimately procure. The
Department provided an interim response that stated a reassessment of
the total procurement quantity would be provided at a later date.
If confirmed, what will be your role in the reassessment of the F-
35 total program procurement quantity, currently established at 2,443
aircraft?
Answer. I understand that the Director of CAPE has been tasked to
lead the reassessment. If confirmed, I would ensure that the work is
completed in a timely manner.
b-21 long range strike bomber
Question. On October 27, 2015, the Air Force announced the award of
the engineering and manufacturing development (EMD) contract for the
new B-21 bomber, a program estimated to cost as much as $80 billion for
development and procurement. The National Defense Authorization Act for
Fiscal Year 2017 directed enhanced reporting of B-21 program cost,
schedule, and performance data to the Government Accountability Office
for more frequent assessments and focused oversight.
If confirmed as Director of Cost Assessment and Program Evaluation,
what will be your role in the B-21 bomber program to ensure cost,
schedule, and performance remain on track?
Answer. As with any major acquisition program, CAPE will continue
to produce Independent Cost Estimates for the B-21 program. If
confirmed, I would also help ensure through the programming phase of
the PPBE process that the B-21 program is fully funded to DOD's latest
cost estimate. As Director of CAPE, I would ensure that the Air Force
and my office continuously assess the program's performance to ensure
that DOD's leadership can proactively address any challenges that occur
during program execution.
munitions
Question. Department of Defense munitions inventories, particularly
those of precision-guided munitions, have declined significantly due to
high operational usage, insufficient procurement, and a requirements
system that does not adequately account for the ongoing need to
transfer munitions to our allies and operations short of major combat,
such as in the current operations in Afghanistan, Iraq, and Syria.
If confirmed, what assessments would you make to support
prioritizing munitions funding to ensure the Department has sufficient
inventories of munitions to meet combatant commanders' needs?
Answer. If confirmed, I would ensure CAPE continues to conduct
independent analyses of munitions issues and provides the Secretary of
Defense with resourcing options that balance munitions requirements
within the total defense program. I also would ensure that these
independent analyses include an assessment of munition transfers to
allies.
Question. How will you assess how the Department of Defense will
adapt to self-imposed Department restrictions on area attack and denial
munitions in accordance with the Oslo Process and the Convention on
Cluster Munitions?
Answer. If confirmed, I would review existing work on the
performance of munitions replacement programs and would work with other
stakeholders to examine DOD's policy and recommend alternatives as
needed.
space acquisition
Question. According to a recent study by the Government
Accountability Office (GAO), fragmented leadership has undermined the
Department of Defense's ability to deliver space capabilities to the
warfighter on time and on budget. One repeated cause for concern has
been fractured decision-making and many layers of bureaucracy.
Do you believe the existing space acquisition structure is
sufficient? If not, what changes do you believe are appropriate?
Answer. Answer. I do not have any recommendations at this time.
Space acquisition, like all DOD acquisition, is undergoing review and
changes associated with the acquisition reforms in the Fiscal Year 2017
NDAA. If confirmed, I would evaluate the impact of these changes and
recommend adjustments, as needed, to improve space acquisition across
DOD.
Question. How would CAPE studies and assessments support more
competition in the launch of Department of Defense payloads?
Answer. I understand that CAPE conducts independent assessments of
the launch services market in general, as well as specific acquisition
approaches for DOD providers, to support the goals of mission assurance
and reasonable prices. Furthermore, CAPE conducts cost estimates and
performance assessment on DOD's Evolved Expendable Launch Vehicle
program, which is designed to provide reliable launch services for
national security space payloads.
Question. The National Defense Authorization Act for Fiscal Year
2017 prohibits the use of Russian rocket engines after December 31,
2022. How would CAPE studies and assessments support the ending of U.S.
dependence on the use of Russian rocket engines as soon as possible,
perhaps even before December 31, 2022?
CAPE analyses provide independent, objective assessments of
alternatives of launch services to inform leadership decisions. If
confirmed as the Director of CAPE, I would ensure that CAPE continues
to work with the Air Force on this issue both through the acquisition
process and through CAPE's role as an independent analyst for DOD.
department of defense information technology programs
Question. The Department of Defense's record in successfully
developing and deploying information technology systems, according to a
2015 GAO report, ``too frequently fail or incur cost overruns and
schedule slippages while contributing little to mission-related
outcomes'' whether for business or operational use. The Defense
Integrated Military Human Resources System, the Air Force's Financial
Information Resource System (FIRST) and Air Operations Center 10.2
upgrade program, and the Defense Enterprise Accounting and Management
System (DEAMS) are but a few examples of failures that represent years
of schedule delays and billions of dollars in cost overruns.
What studies and assessments would you conduct to support changes
in Department of Defense efforts to improve development and deployment
of major information technology systems?
Answer. If confirmed as the Director of CAPE, I would ensure that
CAPE continues to work with the stakeholders across DOD to improve
development and deployment of major information technology systems. I
would also promote studies of commercial IT business models, such as
cloud computing, software-as-a-service, and shared services as
alternatives to traditional DOD IT acquisition efforts. Business IT
programs suffer from similar forces that cause cost and schedule
overruns in other major defense acquisition programs, but they also
exist within an environment that is rapidly changing in the commercial
marketplace. I would look to lessons learned from commercial
experiences and recommendations from organization like GAO to inform
alternatives for leadership.
Question. How will you study and assess that appropriate business
process reengineering is undertaken and accomplished before initiating
new business systems, IT program development, and deployment?
Answer. If confirmed as the Director of CAPE, I would work closely
with the DCMO to provide supporting analysis of business process
reengineering when necessary. I also would explore with DCMO ways to
track customization of IT products that is pursued in lieu of business
process reengineering, as well as the potential for shared services to
encourage business process reengineering as an alternative to acquiring
new IT products.
Question. What role will CAPE play in assessing the development and
deployment of defense business IT systems?
Answer. It is my understanding that the Office of the Secretary of
Defense, including CAPE, is currently pursuing efforts to redefine how
major IT systems are developed and deployed. If confirmed, I would use
CAPE's role as a direct report to the Secretary and lead for Analyses
of Alternatives to empower stakeholders to consider alternate
approaches.
Question. What role will CAPE play to assess the business processes
that these business IT systems support and whether they are
sufficiently aligned with best commercial business practices?
Answer. If confirmed, I would ensure that CAPE analyzes current
business IT approaches relative to commercial practices, such as cloud
computing, software-as-a-service, and shared services. I would also
explore the potential to speed software acquisition and deployment to
weapon systems through commercial software development, testing, and
deployment practices. I understand that DOD is evolving its acquisition
processes to increase the use of leading commercial strategies like
business process reengineering, configuration over customization, and
when necessary, agile software development. If confirmed, I would
ensure that CAPE supports these efforts.
industrial base
Question. How should CAPE consider the health and viability of the
industrial base when developing cost estimates?
Answer. It is critical for CAPE to incorporate the realities of our
industry partners' businesses and the overall health of the industrial
base into DOD's cost estimates and investment strategies. We always
should encourage industry to be more efficient, but we must also take
business base considerations, such as workforce forecasts, into account
to ensure our acquisition programs are properly costed and fully
funded. It is also important to recognize that the industrial base is
changing as DOD engages with non-traditional contractors for access to
emerging technologies. In turn, this shifting of the industrial base
has implications for competitiveness, price comparisons, and cost
estimates.
science and technology
Question. What is your understanding and assessment of the role
that Department of Defense science and technology programs and
organizations have played and will play in developing capabilities for
current and future defense systems?
Answer. S&T organizations lead the DOD through fundamental
technology shifts by anticipating and driving emerging and future
requirements and missions. The S&T enterprise provides a sustainable,
disruptive advantage for U.S. forces by developing leap-ahead science
and making current weapons systems more effective and affordable.
Question. What metrics would you use to judge the value and the
investment level in Department of Defense science and technology
programs?
Answer. Judging the value of S&T investments is a critical and
challenging task. Traditional metrics such as numbers of patents and
journal publications are important indicators of productivity for those
labs that perform basic research, but they do not address Defense-
specific concerns such as transferring technology to the warfighter. If
confirmed, I would be open to pursuing novel, non-traditional ways to
evaluate and balance DOD's research enterprise.
Question. What role can science and technology activities in areas
like cost analysis, data analytics, operations research, and others
play in developing new tools, techniques, and processes that can be
used for the Director of Cost Assessment and Program Evaluation?
Answer. Recent advanced computing and mathematical techniques have
enabled new approaches in data analytics and operations research that
were previously computationally prohibitive. It is my understanding
that CAPE has been an early adopter of many of these data analytic
techniques, and I believe continued application of these techniques
provide the government with better decision-making tools.
Question. How can advanced commercial- and government-developed
data collection, management, and analytics techniques and systems be
used to support the activities of the Director of Cost Assessment and
Program Evaluation?
Answer. As the independent advisor to the Secretary of Defense,
CAPE's mission is critically dependent on data collection, management
and analytics. Advanced commercial and government software systems are
key in supporting CAPE's data handling ability. CAPE is continuously
assessing new data sources, management techniques, and analytic
approaches to better support its key roles in DOD.
congressional oversight
Question. In order to exercise its legislative and oversight
responsibilities, it is important that this Committee and other
appropriate committees of the Congress are able to receive testimony,
briefings, and other communications of information.
Do you agree, if confirmed for this position, to appear before this
Committee and other appropriate committees of the Congress?
Answer. Yes
Question. Do you agree, if confirmed, to appear before this
Committee, or designated Members of this Committee, and provide
information, subject to appropriate and necessary security protection,
with respect to your responsibilities as Director of Cost Assessment
and Program Evaluation?
Answer. Yes
Question. Do you agree to ensure that testimony, briefings, and
other communications of information are provided to this Committee and
its staff and other appropriate committees in a timely manner?
Answer. Yes
Question. Do you agree to provide documents, including copies of
electronic forms of communication, in a timely manner when requested by
a duly constituted committee, or to consult with the Committee
regarding the basis for any good faith delay or denial in providing
such documents?
Answer. Yes
------
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator David Perdue
software acquisition process using the defense innovation advisory
board
1. Senator Perdue. Mr. Daigle, at the hearing, we briefly discussed
the need to modernize software acquisition processes at DOD and the
value that outside expert groups could bring to this challenge. You
stated that you would be open to working with outside groups on this
front. The Defense Innovation Board is group of top innovators,
scholars, and business leaders with a blend of technological and
regulatory experience and their status as a Secretarial discretionary
board. Do you think this expertise makes them well positioned to
partner with Cost Assessment and Program Evaluation (CAPE) on this
issue?
Mr. Daigle. Yes, and if confirmed, I would seek to work with the
Defense Innovation Board to identify improvements to the software
acquisition process.
commercial off-the-shelf options for cape assessments
2. Senator Perdue. Mr. Daigle, although acquisition reform has
remained a priority for DOD acquisition officials, many procurements
are delayed by administrative constraints, staffing concerns, and
inflexible requirements processes. Readily available Commercial-Off-
The-Shelf (COTS) solutions provide a significant increase in
contracting efficiency and ensure servicemembers receive gear and
equipment when needed most. The Army's Rapid Equipping Force (REF) and
Soldier Enhancement Program (SEP) are models for broader COTS product
acquisition. Do you believe DOD can streamline acquisition without
unnecessary delays through procurement of COTS solutions like Personal
Protective Equipment (PPE) and Organizational Clothing and Individual
Equipment (OCIE) products?
Mr. Daigle. Yes, COTS solutions enable the Department to
incorporate technological advances, achieve cost savings, and reduce
development timelines, when they suitably meet military requirements.
It is my understanding that the Department seeks to leverage
commercially mature technology and material solutions, and if confirmed
I would include considerations of COTS solutions as appropriate in my
duties as the Director of Cost Assessment and Program Evaluation.
__________
Questions Submitted by Senator Martin Heinrich
directed energy weapon systems: future programs of record
3. Senator Heinrich. Mr. Daigle, I have long been concerned about
the fact that capable-and-proven weapon systems like high-energy lasers
and high-powered microwaves have languished in what has seemed like
perpetual research and development (R&D). A major roadblock that has
prevented these weapon systems from crossing the threshold into the
field is the requirements-setting process, where the prevailing belief
is that sufficient kinetic capabilities already exist, so an
alternative is not needed, and therefore not required. This mentality,
however, ignores the potential added value of directed energy systems
in terms of cost effectiveness, sustainability, endless magazine, and
precise targeting. As the next potential Director of Cost Assessment
and Program Evaluation (CAPE), one of your responsibilities will be
advising the Joint Requirements Oversight Council and conducting
Analyses of Alternatives (AOA) of weapon systems.
Given your 6 years of prior experience at CAPE, as well as
additional experiences, to what extent has CAPE advised the Joint
Requirements Oversight Council in the consideration of directed energy
weapon systems for a needed capability?
Mr. Daigle. CAPE is a regular participant in the Joint Capabilities
Integration and Development System (JCIDS), including the Joint
Requirements Oversight Council (JROC). CAPE provides input regarding
technical, operational, and programmatic implications that should be
considered as requirements are developed. It is my understanding that
CAPE is helping to identify mission sets and lay the groundwork
necessary to establish appropriate requirements for directed energy
systems for the Department's new Laser Roadmap. If confirmed, I would
continue CAPE's participation in JCIDS, the JROC, and the Laser
Roadmap.
4. Senator Heinrich. Mr. Daigle, how does CAPE factor in the added-
value of prototypes and weapon systems that are not already-established
Programs-of-Record when conducting AOAs?
Mr. Daigle. The purpose of an AoA is to identify and evaluate the
trade space available to mitigate or close capability gaps with a
materiel solution. As such, the added value that any alternative,
including prototype systems, could provide is evaluated based on
available information. Technical, programmatic, operational, and policy
risks, as well as a life-cycle cost estimate, are also considered for
each alternative, including prototype systems, and incorporated into a
comprehensive assessment relatives to the capability gap.
In addition, the Fiscal Year 2017 NDAA requires CAPE to ensure that
AoAs include consideration of evolutionary acquisition, prototyping,
and a modular open system approaches. If confirmed, I would ensure
these new statutory requirements are fully integrated into CAPE's
processes.
5. Senator Heinrich. Mr. Daigle, given your 6 years of prior
experience at CAPE and additional experiences, what specific
warfighting scenarios has CAPE considered directed energy weapon system
capabilities?
Mr. Daigle. It is my understanding that CAPE has conducted
extensive analysis of directed energy weapon capability relating to
missions in multiple operational theaters involving missile defense,
counter-rocket, artillery, and mortar, as well as counter-unmanned
aircraft systems.
6. Senator Heinrich. Mr. Daigle, is CAPE recommending directed
energy weapon system capabilities for counter-rocket, artillery, and
mortar scenarios and counter-UAS [unmanned aircraft systems] scenarios?
Mr. Daigle. I am not aware of whether CAPE has made any specific
recommendations in this area, but it is my understanding that CAPE
includes directed energy weapon systems when exploring alternatives to
these scenarios. CAPE presents the trade space on technical and
operational capability, technical risk, and cost-effectiveness for
Department consideration.
17. Senator Heinrich. Mr. Daigle, as Director, where added-value
exists, will you and your staff recommend next generation weapon
systems of high-energy lasers and high-powered microwaves when advising
the Joint Requirements Oversight Council and conducting AOAs?
Mr. Daigle. If confirmed, I will ensure CAPE includes directed
energy systems, as appropriate, when conducting AoAs, such as the
Indirect Fire Protection Capability, Global Ballistic Missile Defense
Sensor AoA, and the Defense Against Hypersonic Weapons AoA. If
confirmed, I would also ensure that all value-added alternatives,
including high-energy lasers and high-powered microwaves, are provide
to the JROC.
__________
Questions Submitted by Senator Dan Sullivan
shifting the alaska cost vs location narrative
8. Senator Sullivan. Mr. Daigle, Alaska is traditionally viewed as
the most expensive CONUS [Continental United States] and least forward
OCONUS [Outside the Continental United States] location. This ``glass
half-empty'' vantage point prevents the Department of Defense (DOD)
from capitalizing on the strategic location and resources in Alaska.
What is your opinion on this issue, and can I get your commitment to
approach Alaska with a ``glass half-full'' perspective as the furthest
CONUS and least-expensive OCONUS location?
Mr. Daigle. If confirmed, I will ensure CAPE continues to provide
objective, independent analyses of all programs and issues. As such, I
commit to giving Alaska fair consideration in any resourcing decisions.
fiscal year 2017 ndaa acquisition changes impact
9. Senator Sullivan. Mr. Daigle, considerable changes were made to
the acquisition process in the Fiscal Year 2017 National Defense
Authorization Act (NDAA). What effect will this have on Cost Assessment
and Program Evaluation (CAPE) modeling for future weapons systems?
Mr. Daigle. The Fiscal Year 2017 NDAA increases the range of
programs for which CAPE conducts or approves independent cost estimates
(ICEs); requires discussion of programs risks, alternatives, and
sustainment costs be included in ICEs; and provides additional
statutory authorities for the collection of acquisition cost data.
10. Senator Sullivan. Mr. Daigle, can you describe how these
changes will help or hinder your role?
Mr. Daigle. These changes will help CAPE fulfill its role as the
Department's independent cost and program analysis organization. In
particular, the new statutory requirements on data collection will
improve the quality of data that CAPE and the Department use to
evaluate cost and risk in major acquisition programs, helping to
resolve problems CAPE has experienced in the past related to incomplete
and out-of-date program data.
------
[The nomination reference of Mr. Robert B. Daigle follows:]
Nomination Reference and Report
As In Executive Session,
Senate of the United States,
April 25, 2017.
Ordered, That the following nomination be referred to the Committee
on Armed Services:
Robert Daigle, of Virginia, to be Director of Cost Assessment and
Program Evaluation, Department of Defense, vice Jamie Michael Morin.
------
[The biographical sketch of Mr. Robert B. Daigle, which was
transmitted to the Committee at the time the nomination was
referred, follows:]
Biographical Sketch of Robert B. Daigle
Education:
University of Vermont
- 8/1989 to 5/1997
- B.A., Economics and B.A., Mathematics
Columbia Business School
- 1/2002 to 5/2003
- M.B.A., Finance
Georgetown University
- 7/2004 to 5/2006
- M.A., Security Studies
Employment record:
ASTEC Consulting
- Director of Analytics
- 4/1996 to 12/2001
Office of the Secretary of Defense (Cost Assessment and
Program Evaluation)
- Director, Program Resources and Information Systems
Management Division
- 11/2003 to 7/2009
Center for the Study of Financial Market Evolution
- Executive Vice President
- 7/2009 to 12/2011
Advanced Securities Consulting
- Executive Vice President
- 1/2012 to 9/2013
Military Compensation and Retirement Modernization
Commission
- Executive Director
- 9/2013 to 1/2016
House Armed Services Committee
- Professional Staff Member
- 1/2016 to Present
Honors and Awards:
Military Awards:
- Expert Infantry Badge
- Army Achievement Medal (with one oak cluster)
- Good Conduct Medal
- National Defense Service Medal
Academic Awards:
- University of Vermont
- Freeman Saltus Award
- Amato Scholarship
- Milton J. Nadworny Scholarship for economics
- Outstanding Senior Award for mathematics
______
[The Committee on Armed Services requires all individuals
nominated from civilian life by the President to positions
requiring the advice and consent of the Senate to complete a
form that details the biographical, financial, and other
information of the nominee. The form executed by Mr. Robert B.
Daigle in connection with his nomination follows:]
[The nominee responded and the information is contained in
the Committee's executive files.]
------
[The nominee responded to Parts B-F of the Committee
questionnaire. The text of the questionnaire is set forth in
the Appendix to this volume. The nominee's answers to Parts B-F
are contained in the Committee's executive files.]
------
[The nomination of Mr. Robert B. Daigle was was reported to
the Senate by Chairman McCain on May 23, 2017, with the
recommendation that the nomination be confirmed. The nomination
was confirmed by the Senate on August 1, 2017.]
------
[Prepared questions submitted to The Honorable David L.
Norquist by Chairman McCain prior to the hearing with answers
supplied follow:]
Questions and Responses
defense reforms
Question. Do you support these reforms?
Answer. Yes, based on my understanding of their purpose.
Question. What other areas for defense reform do you believe might
be appropriate for this Committee to address?
Answer. I have no recommendations at this time, but I understand
that both the Secretary of Defense and the Director of the Office of
Management and Budget (OMB) have issued guidance for DOD to undertake
studies of opportunities for reform. Should I be confirmed I would
fully support those efforts.
duties
Question. What is your understanding of the duties and functions of
the Under Secretary of Defense (Comptroller)? How will you prioritize
them?
Answer. The duties and functions of the Under Secretary of Defense
(Comptroller) are described in Section 135 of title 10 and in Section
902 of the Chief Financial Officer (CFO) Act. It includes supporting
the Secretary of Defense by advising on all financial management
matters; overseeing the financial management activities of the
Department to include establishing and supervising the execution of
policies; developing and maintaining integrated agency accounting and
financial management systems; supervising and directing the preparation
of budget estimates of the Department of Defense; monitoring the
financial execution of the budget; overseeing the preparation and
submission of financial statements and supporting the recruitment and
training of the financial management workforce.
My two highest priorities would be preparing the budget to ensure
the Department has the resources to accomplish its mission and using
the financial statement audits to drive improvements in the
Department's financial management activities, systems and reports.
Question. What recommendations, if any, do you have for changes in
the duties and functions of the Under Secretary of Defense
(Comptroller)?
Answer. None at this time.
Question. Section 135 of title 10, United States Code, designates
the Under Secretary of Defense (Comptroller) as the Chief Financial
Officer of the Department of Defense.
What do you believe would be your major responsibilities as Chief
Financial Officer?
Answer. By designating the USD (Comptroller) as the CFO of the
Department of Defense this specifically incorporates the
responsibilities identified in the CFO Act. I included those
responsibilities in my description of the duties and functions of the
Comptroller because they are interconnected.
Question. However, to the extent that some see the term Comptroller
as primarily relating to the budget, the addition of the title CFO
highlights and emphasizes the responsibilities for accounting,
financial systems, and internal controls. I believe that a major
responsibility of the CFO over the next several years to is to support
the audits of the services and defense agencies and to develop,
implement and oversee an effective process of fixing issues identified
during the audit.
qualifications
Question. The duties of the Comptroller of the Department of
Defense (DOD) are set forth in section 135 of title 10, United States
Code, and in DOD Directive 5118.03. Among the duties prescribed are
advising and assisting the Secretary of Defense in the preparation of
budget estimates, establishing and supervising the execution of
policies as it pertains to budget preparation, budget execution, and
accounting, and reporting of Department of Defense funds.
What background and experience do you possess that qualify you to
perform the duties of the Comptroller?
Answer. I have over 25 years of experience in Federal financial
management to include assignments at a field site, a major command, a
service headquarters, the Office of the USD (Comptroller), another CFO
Act agency (DHS), a Certified Public Accounting firm and for the
Congress. These assignments provide a breadth and depth of experience
that is directly relevant to the position of USD (Comptroller) / CFO.
For example, as the CFO of the Department of Homeland Security
(DHS) I was responsible for preparing, justifying and executing a $50
billion agency budget. In addition, I managed and provided policy
guidance and oversight of DHS financial management activities,
operations and over 1,500 financial management personnel. This included
directly managing a staff of 120 with responsibility for programming,
budgeting, executing funds, preparing financial statements,
strengthening internal controls, consolidating financial systems and
coordinating with external auditors.
I have also seen how financial management processes are executed in
the field. As Director of Resource Management at Menwith Hill Station,
a military field site in England, I managed a budget of $20 million and
a diverse staff of 28 United States and United Kingdom personnel. I was
responsible for planning, programming, budgeting, accounting,
disbursing, military and civilian pay, manpower documentation and
internal management controls. This assignment provided me exposure to
how these functions are executed at the lowest level in an agency and
gives an important perspective to consider when preparing financial
management policy at the Department level.
Specific to the budget, I have extensive experience working the DOD
budget process at a number of levels which provides me useful insights
on how the budget is built, reviewed and executed. For example at
Menwith Hill Station I led the development and execution of the budget
for a field site. When I worked for U.S. Army Intelligence and Security
Command, I supported budget development for an Army Major Command
supporting a defense agency. As a Program/Budget analyst for the Army's
Deputy Chief of Staff for Intelligence I prepared and defended the
Army's National Foreign Intelligence Program (NFIP) budget and
integrated the Intelligence Community and the Army/Department of
Defense budget processes. Later I worked for the House Appropriations
Committee, Subcommittee on Defense where I analyzed and evaluated over
$30 billion of the defense budget, including funding for Air Force
aircraft and munitions, ballistic missile defense, chemical and
biological warfare defense, information technology and information
assurance. This experience has allowed me to see the budget formulation
and execution from multiple levels inside the Department as well as
from the Congressional perspective.
As a Partner with a Certified Public Accounting firm, I provided
advice and solutions to Federal executives related to accounting,
programming, budgeting and internal controls and financial systems.
This gave me exposure to a wide range of financial management issues as
well as an understanding of federal contracting from the vendor's
perspective.
Finally, and perhaps most relevant. I served as a Deputy Under
Secretary of Defense to two DOD Comptrollers, the Honorable Dov Zakheim
and the Honorable Tina Jonas. I supported them across their range of
responsibilities, including as DUSD for Budget and Appropriation
Affairs (BAA) where I worked closely with both the House and Senate
authorization and appropriations committee staff on defense funding and
key defense authorities. This experience gave me a valuable
understanding of the structure and function of the Comptroller's office
as well as with a sound working relationship with many of the senior
civil servants who currently work there.
Question. Have you participated in the audit of a large, complex
public or private sector institution?
Answer. Yes. As the Chief Financial Officer of the Department of
Homeland Security I participated in the annual financial statement
audits. I attended kickoff meetings, status meetings and close out
meetings with the auditors. I led the establishment of a formal process
to eliminate pervasive weaknesses in DHS's financial statement. As part
of executing that plan I held regular meetings to review the
development, status and execution of corrective action plans. From
fiscal year 2006 to fiscal year 2008, DHS reduced the number of
material weaknesses by 40 percent and the number of department-wide
audit disclaimer conditions by 70 percent. My successors continued the
process and today DHS has achieved four consecutive clean opinions. In
addition, as a Partner at a CPA firm I advised federal executives and
provided teams of accountants to support clients as their agency
underwent financial statement audits.
Question. What formal education have you had in financial
management or auditing?
Answer. I have a Master's in Public Administration and I am a
Certified Government Financial Manager (CGFM), the professional
certification issued by the Association of Government Accountants
(AGA). During my federal service I attended numerous training programs
on topics ranging from Planning, Programming, Budgeting and Execution
(PPBE) to the Anti-Deficiency Act. As part of my position as a Partner
with Kearney and Company I dedicate approximately 40 hours a year to
continuing professional education in financial management or auditing.
Question. Do you believe that there are any steps that you need to
take to enhance your expertise to perform these duties?
Answer. Should I be confirmed the most important step would be to
review the ``as-is'' of current DOD processes to see how they are
consistent with or different from best practices.
Question. If confirmed, which of these roles and duties do you
believe will be particularly challenging to you based on your own
professional experience?
Answer. Although I have significant experience at DHS and Kearney
with financial statement audits, given the complexity of DOD's
situation I still expect the audit to be particularly challenging.
relations with congress
Question. What are your views on the state of the relationship
between the Under Secretary of Defense (Comptroller) and the Senate
Armed Services Committee in particular, and with the Congress in
general?
Answer. My understanding is that over the last few years the
relationship has not been as good as it should be but that there is a
strong desire on both sides to improve the relationship.
Question. If confirmed, what actions would you take to sustain a
productive and mutually beneficial relationship between the Congress
and the Office of the Under Secretary of Defense (Comptroller)?
Answer. I believe that a productive and mutually beneficial
relationship requires regular communications both formal and informal.
Should I be confirmed, this would include both empowering and directing
the staff to maintain regular communications as well as personally
meeting with the Committee staff and/or members on a regular basis.
audit and financial management
Question. The Department of Defense is the only federal agency
unable to complete a financial audit in accordance with the law,
despite having invested billions over the past 16 years to do so. The
persistent lack of accountability by Department leadership for results
leads to concerns within the Congress and in the public over the
stewardship of Department funds and the qualifications of the people
entrusted to lead the Department in its audit efforts. It is not simply
an abstract statutory requirement that the Department produce auditable
financial statements showing where and how it spends its annual
budget--the accuracy of the financial information underlying the
financial statements is critical to the Department's ability to develop
an adequate defense budget and make important financial decisions in an
environment where every defense dollar counts.
Do you commit to meeting the upcoming statutory audit deadlines
requiring that the Department's financial statements be ready for audit
by September 30, 2017, and that the audit of the fiscal year 2018
financial statements be completed by March 31, 2019?
Answer. I believe that the audits should begin as soon as possible.
Should I be confirmed I will do everything within my authority to
achieve those deadlines and to see that the audits are completed by
March 31, 2019.
Question. Under your leadership, when will the Department achieve a
clean audit opinion?
Answer. There is not enough information to know. It depends on what
the auditors find once the audits start and how difficult it is to
implement the appropriate corrective action plans.
Question. Will you be prepared to meet with Members of this
Committee every quarter until this happens?
Answer. Yes, and I appreciate the Committee's willingness to have a
regular meeting. The support of the Committee will be essential to the
success of this effort.
Question. Describe your knowledge of accounting and financial
management principles, give specific examples of how you have applied
this knowledge in previous positions, and explain how your experience
qualifies you to be the Under Secretary of Defense (Comptroller).
Answer. I would group these principles under four topics.
First, in budget execution the key principle comes from Article 1
Section 9 of the Constitution. ``No money shall be drawn from the
treasury, but in consequence of appropriations made by law.'' This is
Congress' power of the purse. To comply with this in each of my
assignments that involved executing funds we paid careful attention to
fiscal law and specifically time, purpose and amount. This prepares me
for the role of USD (Comptroller) both in ensuring DOD policy is
consistent with this principle but also in understanding and
investigating potential Anti-Deficiency Act violations.
The second set of principles relate to the Planning, Programming,
Budgeting, and Execution System (PPBES). There are six core principles
here that relate to ensuring the leadership is provided the right
information to make informed and effective decisions:
Decisions should be based on explicit criteria of
national interest.
A multi-year financial plan should be used to focus
decisions on desired end-states, and project the consequences of
present decisions into the future.
Needs and costs should be considered simultaneously.
Major decisions should be made by choices among balanced,
feasible alternatives.
The Department should have an active analytical staff to
provide it with relevant data and objective perspectives.
Open and explicit analysis, available to all parties,
should form the basis for major decisions.
This was part of the DOD process when we built the Future Years
Defense Program (FYDP) and we used a similar approach at DHS when we
supported the Secretary in building the Future Years Homeland Security
Program (FYHSP). Understanding these principles is important as the USD
(Comptroller) and the Director of CAPE are jointly responsible for
supporting the Secretary and Deputy Secretary in this process.
With regard to internal controls, GAO's Standards for Internal
Control in the Federal Government (also called the Green Book) includes
17 Principles of Effective Internal Control. To focus on just two
examples: one is to identify, analyze and respond to risk, another is
to perform monitoring activities. In each of my assignments I have
looked at the mission of my organization to identify the risk and
implement effective internal controls. For example, I would ensure
segregation of duties to mitigate against fraud by dividing key tasks
among several employees so no single employee can process a payment to
themselves. Similarly, at DHS we would routinely review key controls to
ensure they were still operating effectively as part of our monitoring
process. This is relevant to the USD (Comptroller) because they are
responsible for establishing and maintaining the DOD Manager's Internal
Control Program (MICP).
In accounting the Federal Accounting Standards Advisory Board
(FASAB) issues accounting standards consistent with overarching
accounting concepts. For example, in SFFAC 1, Objectives of Federal
Financial Reporting one concept is Budgetary Integrity ``Federal
financial reporting should assist in fulfilling the government's duty
to be publicly accountable for monies''. This broad principle would
include ensuring the accuracy of the status of budgetary resources. At
DHS we examined areas where a component had set aside or ``obligated''
federal funds for a specific purpose. That purpose had been achieved
without using all the obligated funds and so to ensure the accuracy of
the status of those funds they were deobligated and were available for
future use.
I believe my experience working with and following these key
federal financial management principles across the range of a CFO's
responsibilities provides a solid foundation to serve as USD
(Comptroller) and to address new situations as they arise.
Question. Describe your previous experience leading large-scale
change initiatives in complex organizations.
Answer. When DHS was established it was the largest Federal re-
organization since the creation of DOD. The organizations that formed
DHS brought with them different policies and numerous audit weaknesses.
The Office of the DHS CFO was newly formed and a work in progress. The
Office of the DHS CFO also contributed directly to at least three audit
weaknesses including a lack of trained staff and an absence of
financial management policies. As the first Senate confirmed CFO, I
adopted a multi stage process that included:
Recruiting individuals with audit backgrounds and strong
accounting skills.
Providing our staff training and encouraging
certifications.
Creating an online financial management policy manual
based on best practices.
Executing an internal control playbook that had
corrective action plans for each of the material weaknesses identified
by the auditor and provided accountability.
Establishing a risk management and assurance office that
conducted internal control testing in areas where the auditors hadn't
yet tested.
Conducting annual reviews that identified where we had
succeeded, where we had fallen short and what legislative and policy
changes were on the horizon.
As a result, we reduced the number of Audit Disclaimer conditions
from ten to three and the number of material weaknesses from ten to
six. Most importantly the process we put in place continued after my
departure and under the quality leadership of the next two CFO's DHS
has now achieved four clean audit opinions.
Question. What is your assessment of the Department's efforts to
achieve a clean financial statement audit to date? What specific
changes will you make to its approach?
Answer. Where the Department has started routine financial
statement audits there has been success. Multiple DOD entities include
the Defense Finance and Accounting Service (DFAS) and the U.S. Army
Corps of Engineers, have achieved and sustained clean opinions.
However, for the Army, Navy and Air Force the Department has spent
approximately 7 years getting ``audit ready''. I believe that
correcting problems without the benefit of an audit has diminishing
returns. Should I be confirmed I would work to ensure all the services
were under a financial statement audit as this is the most efficient
path to success.
Question. Based on your experience at the Department of Homeland
Security, what incentives need to be in place to ensure senior leaders
in the military services and defense components--not just the financial
management community--are fully invested and engaged in the process of
achieving a clean audit opinion? Are those incentives currently in
place in the Department? What disincentives or structural impediments
currently exist?
Specifically, what measures should be used to hold senior leaders
accountable if they do not meet statutory deadlines for the Department
of Defense auditability?
Answer. It would be very valuable to have a range of tools and
incentives in place to build and sustain senior leadership support and
accountability for achieving a clean audit opinion. I am not aware of
all the tools currently available to the Department or how effective
they are. Should I be confirmed, I would make it a priority to examine
these options and provide my recommendations to the Committee.
Question. Based on your experience at the Department of Homeland
Security, what is the merit of asset valuation to the Department of
Defense?
Answer. There is very little merit in valuing old assets for which
the relevant documentation is no longer available and the cost of
valuation would be high. In addition, these items depreciate and become
less material over time so valuing them is less important. If the
process can be implemented in a cost efficient manner there is benefit
in knowing the value of new assets as it provides the foundation for
Capital Budgeting or other related reforms.
Question. What actions will you take to link financial information
to performance measurement and monitoring mechanisms to enable improved
decision making about the Department's investments?
Answer. The annual audits will highlight and validate areas for
improvement in DOD's internal controls and information. As the DOD
remediates audit findings and improves its overall financial management
processes and information, decision makers will have better access to
reliable and timely information. If confirmed, I will work with senior
leaders in the DOD to use one source of financial data for both
financial statement preparation and investment decision making. This
will emphasize the importance of reliable financial information and
will directly link performance and financial management.
Question. Will you commit to a review of the Department of
Defense's financial operations structure, to include an independent
assessment of finance and auditing practices and organizations in the
Department of Defense and how other federal agencies, which maintain
clean audit opinions, successfully use modern financial systems of the
Department of Treasury for non-military-unique financial transactions,
accounting, and reporting?
Answer. If confirmed, I will review DOD's financial operations
structure. Before committing to contract for an independent assessment
of our finance practices I would need to understand how this would
differ from a financial statement audit. Should I be confirmed I would
also be open to examining the financial systems used by the Department
of Treasury and how that might benefit DOD.
The Defense Contract Audit Agency (DCAA) performs a variety of
audit services that support the Department in awarding, administering,
and overseeing contracts, to include auditing costs incurred under
government contracts. DCAA also provides these services to other
federal agencies and departments. In response to increased demand for
such services, an intergovernmental working group conducted market
research on these services, which found that private sector companies
offer pricing for these services that competes with DCAA's in some
cases.
Question. What are your views on whether and under what conditions
the private sector might perform these services?
Answer. I would like an opportunity to review the data obtained and
the results from the intergovernmental working group and evaluate their
cost/benefit analysis. Should I be confirmed I will review the research
as well as the purpose and standards for the audit to determine the
path forward that will best serve the warfighter and the taxpayer.
Question. Which auditing services may be inappropriate for
outsourcing to for-profit industry concerns, and why?
Answer. While I am generally familiar with the auditing services
provided by DCAA I would need to look into the issue further to
determine which functions might be inappropriate for outsourcing. There
is work that DCAA performs that may include some inherently
governmental aspects that should not be outsourced. Should I be
confirmed, I would look forward to working with DCAA, the Services and
Industry to determine the best use of independent public accounting
firms for auditing contracts.
Question. What is the appropriate role for DCAA?
Answer. DCAA serves as an advisory role to contracting officers as
experts in cost accounting and applying the Federal Acquisition
Regulations for auditing contractor data and records. DCAA has the
oversight over several billion dollars of contract payments to ensure
they are allowable and reasonable. DCAA provides contract audits and
negotiation assistance to contracting officers to achieve fair and
reasonable contract prices.
Question. What have been some of the successes (especially in terms
of savings to Defense Department and the taxpayer) from the work of
DCAA?
Answer. I understand that for the past 6 years, DCAA has returned
over $3 billion in savings annually to the Department and taxpayers.
These are actual savings based on contract actions taken by Government
contracting officers as either reductions in contract prices or dollars
returned to the Department by the contractors.
major challenges and priorities
Question. In your view, what are the major challenges confronting
the next Under Secretary of Defense (Comptroller)/Chief Financial
Officer?
Answer. The USD (Comptroller) faces a number of ongoing challenges.
The first is developing defense budgets that are consistent with the
Department's mission of protecting the vital interests of the United
States. The current defense caps and repeated, lengthy continuing
resolutions have made it challenging to build and execute a properly
sized defense budget.
The second challenge is the audit. The Department must start the
audit as required by law and then use the audit to drive effective
corrective action plans. The audit will provide a baseline of the
current financial management status, and it will take time and
consistent attention to implement the corrective actions necessary to
achieve a clean opinion.
The third challenge is to continue to improve the effectiveness and
efficiency of the Department. As directed by OMB, the Department has
started a process for identifying reforms. The USD (Comptroller) must
help identify critical reforms and then develop plans for implementing
reforms and achieving efficiencies.
The fourth challenge is to continue workforce development. The
Department's success with the budget, the audit and implementing
reforms depends in large part on the skill set and experience of the
DOD financial management workforce.
Question. If confirmed, what plans do you have for addressing these
challenges?
Answer. If confirmed, I will work closely with Secretary and Deputy
Secretary and other leaders across the Department and within USD
(Comptroller) to tackle these challenges head on.
For the budget process I would use the PPBES process described
before as a means to develop and justify a defense budget that supports
the President's and the Secretary's vision. For the audit I would begin
by reviewing the status of existing DOD initiatives and then seeing how
the lessons learned from DHS could be used to accelerate the process.
On defense reform, I would begin by joining the current process
initiated by the Deputy Secretary and then look for ways to continue
and expand the reform effort through the Comptroller organization.
Developing and sustain a professional financial management
workforce is the foundation for meeting each of these challenges. DOD
has a strong program already in place and I would look to build on that
existing program, to include continuing to implement the course-based
certification program for Defense financial managers that was
authorized by Congress in the fiscal year 2012 defense authorization
bill.
overseas contingency operations account
Question. The use of the Overseas Contingency Operations (OCO)
account has been hotly debated for several years. A primary reason for
this is the fact that OCO dollars are exempt from the caps of the
Budget Control Act (BCA).
What are your views about the use of the OCO account in the
Department of Defense's annual budgeting?
Answer. The Overseas Contingency Operations (OCO) account was
intended to provide budget transparency and a funding mechanism
appropriate for the mission. While the BCA caps have complicated OCO, I
believe the issue is a result of the caps and not OCO and the solution
depends on repealing the defense caps.
Question. OMB Director Mick Mulvaney has made public statements on
his desire to transfer all funding residing in the OCO account into the
base accounts. In a recent press article referring to OCO, he was
quoted as saying, ``It's past time to do away with the slush fund
entirely.''
Do you concur with Director Mulvaney's views on OCO?
Answer. I have not spoken with Director Mulvaney regarding his
views on OCO. I do know that OMB did include OCO funding in the Request
for Additional Appropriations and has indicated in the Budget Blueprint
that it will request $65 billion in 2018 for Overseas Contingency
Operations. I believe that this is appropriate.
Question. Do you believe that the existing criteria governing OCO,
written by the OMB Director in 2010, and used to formulate the Defense
Department's budget request should be updated or amended? If so, how?
Answer. I believe that it is always useful to review the criteria
to ensure that it is appropriate to the nation's current requirements.
I do not have any specific recommendations for changes at this time.
Question. Do you believe that some activities, like the European
Deterrence Initiative, which do not meet the existing OMB OCO criteria,
should remain in OCO?
Answer. It is my understanding that the Office of Management and
Budget made an exception to the OCO rules for the European Reassurance
Initiative (ERI). As I understand it, the purpose of the ERI is to
reassure our NATO allies and European partners that the United States
is prepared to address any threat or destabilizing action against their
national security to include those by Russia's aggressive actions. I
believe that any discussion about moving a program out of OCO depends
on resolving the issue of the defense caps.
The Bipartisan Budget Agreement of 2015 included some base funding
in OCO for fiscal years 2016 and 2017. Consequently, the Defense
Department's budget request for fiscal year 2017 included approximately
$5 billion in base funding in OCO.
Question. Do you believe it is more important to get funding at
your requested levels, even if it is in OCO?
Or would you prefer a more stringent adherence to the OCO criteria,
even at the cost of not securing additional money?
Answer. I believe it is important to provide DOD the requested
funding levels. While I support adherence to the OCO criteria I believe
that this depends on repealing or adjusting the BCA caps.
The BCA remains in place until 2021. Both the Secretary of Defense
and the President have stated the need to repeal the ``defense
sequester.''
Question. What are your views on how the BCA impacts the military?
Should the BCA be amended or repealed?
Answer. My understanding from the testimony of the Secretary and of
the Service chiefs is that the defense sequester has been harmful to
our military's readiness. President Trump campaigned on repealing the
defense caps and I support that position.
Question. If you believe the BCA should be amended or repealed, how
will you prioritize that effort with other duties as the Comptroller?
Answer. The President has stated his desire to repeal the BCA
defense caps. I support that and although the Comptroller does not have
the authority to make that change, should I be confirmed I would
provide the Secretary and the Administration my full support. Achieving
the proper level of funding for the Department is always a high
priority for the Comptroller.
personnel costs
Question. The growing cost of military personnel hampers the
Department of Defense's ability to confront future worldwide threats. A
large portion of the military compensation package consists of in-kind
benefits--health care, housing, tax-free shopping in military
exchanges, and taxpayer subsidized commissaries. The total costs to
provide these benefits are rapidly growing, even as personnel end
strengths have been reduced. In fiscal year 2016, the military health
system consumed about $1 of every $12 in the defense budget.
Should the Defense Department's personnel costs grow at the rate of
inflation? Or should the topline defense budget adjust to match the
growth in personnel compensation and in-kind benefit costs?
Answer. The topline for the defense budget should depend on the
Department's mission, the appropriate force structure to achieve that
mission and the compensation required to recruit and retain a quality
force.
base realignment and closure (brac)
Question. Do you believe another BRAC round is necessary? If so,
why?
Answer. Before making a recommendation on another BRAC round I
would need to understand both the existing capacity as well as the
Secretary's vision for the future force. BRAC is a significant
undertaking and a decision to request that authority should receive
careful consideration. If confirmed, I will work with the Secretary to
carefully consider the matter.
It has been noted that the 2005 BRAC round resulted in major and
unanticipated implementation costs and saved far less money than
originally estimated.
Question. What is your understanding of why such cost growth and
lower realized savings have occurred?
Answer. I am not familiar with the specifics of the cost growth. If
confirmed and if Congress authorizes another round of BRAC, I will work
with the appropriate organizations within DOD to seek ways to improve
the cost and saving estimating process; drawing on lessons learned from
prior BRAC rounds.
Question. How do you believe such issues could be addressed in a
future BRAC round?
Answer. If confirmed, I will work with the various organizations
within DOD to ensure that cost estimates are improved.
internal budgeting practices
Question. Many accuse the federal agencies of executing budgets
with a ``spend it or lose it'' mentality when it comes to obligating
funds. Do you believe that is a problem in the Department of Defense?
If so, how would you address it?
Answer. A perspective of ``spend it or lose it'' is not in the
interest of the taxpayer. I believe this is a risk that could be
addressed. For example, at DHS, Congress included authority that any
organization that did not spend all its money at year end could keep 50
percent of it to use in the next fiscal year.
Question. Do you believe the Department should have some level of a
carryover authority, particularly given the frequency by which the
Department operates under a continuing resolution?
Answer. That may make sense given the length and frequency of the
recent continuing resolutions. If confirmed, I will look into it.
Question. What are your opinions on the reprogramming process? What
do you believe should be the considerations that govern how the
Department uses this process?
Answer. From my previous time working for the Department and for
Congress, I know that the Department uses reprogramming actions to
address the highest priority of emerging requirements. It is my
understanding that the Department does not implement any prior approval
reprogramming action until all of the congressional defense committees
approve the request. As far as I know, this process is working well.
The Department of Defense is requesting growth in the budget to
improve critical capabilities to deal with growing threats around the
world. In years past, the Department included items in the budget
request that were not as critical to supporting the mission of the
military, while leaving high priority items unfunded.
Question. How will you manage the budget process to ensure that
funding is going to the highest set of priorities throughout the entire
budget? And that each of the services are funding the highest set of
priorities and that risk is evenly distributed amongst the services?
Answer. It is important to establish a budget process that brings
the key information to the attention of decision makers. During both
the budget build process and during budget execution, the Comptroller's
office continually reviews service budget requests to identify gaps and
proposes changes to those requests to ensure that funding is consistent
with the Secretary's priorities. Should I be confirmed I would ensure
that when issues are identified they are brought to the appropriate
level for decision and that the relative merits and mission priorities
are properly considered.
Question. Do you believe the Department's Planning, Programming,
Budgeting, and Execution process needs to be reformed? If so, how?
Answer. As far as I know, in a normal year the Department's
Planning, Programming, Budgeting, and Execution process works well and
other organizations are now using it to build their budgets. When the
schedule is compressed, however, this creates significant challenges
for the Department. If confirmed, I will look into it to determine if
any modifications need to be made and will make any such
recommendations to the Secretary of Defense.
Question. Do you believe there should be an independent assessment
of the efficiency and effectiveness of these processes?
Answer. It is hard to know from outside the Department. Should I be
confirmed, I would be in a better position to determine the value of an
independent assessment.
Question. What flexibility needs to be incorporated into Defense
Department policies and regulations to allow for more agile programming
and budgeting to help the Department take advantage of emerging
technologies or deal with emerging threats?
Answer. I am not aware where additional flexibility is needed in
the current process. Normally taking advantage of emerging technologies
or addressing emerging threats is something that occurs during
execution. If confirmed, I will discuss with the congressional defense
committees how changes in policy or in the program/budget process could
improve our ability to address such emerging technologies and threats.
Question. What new authorities or legislative changes would allow
the Defense Department to more effectively execute needed acquisition
and management reform initiatives?
Answer. I am not aware of any changes needed. If confirmed, I will
work with the Congress to make any changes necessary to allow the
Department to more effectively execute acquisition and management
reform initiatives.
Question. Comptroller Personnel and Business Processes What steps
will you take to improve the quality of the Defense Department's
comptroller, auditing, and financial management workforce?
Answer. First I would need to review the existing program to
determine its strengths and weaknesses and if it provides the right
approach to recruit, train and mentor quality staff to include those
with accounting and auditing experience. If there are any gaps I would
adjust accordingly.
Question. What new business processes will you implement to improve
the effectiveness and efficiency of comptroller functions and execution
of comptroller missions?
Answer. It is hard to know from outside the organization. Should I
be confirmed, I would be in a better position to identify ways to
improve the effectiveness and efficiency of the Comptroller functions.
Question. What steps will you take to ensure a continuous review of
these business processes for their efficacy and consistency with best
practices?
Answer. I would need to see what tools are available to the
Comptroller, should I be confirmed. One option is to use the A-123
process which is designed to review end-to end processes.
congressional oversight
Question. In order to exercise its legislative and oversight
responsibilities, it is important that this Committee and other
appropriate committees of the Congress are able to receive testimony,
briefings, and other communications of information.
Do you agree, if confirmed for this position, to appear before this
Committee and other appropriate committees of the Congress?
Answer. Yes
Question. Do you agree, if confirmed, to appear before this
Committee, or designated Members of this Committee, and provide
information, subject to appropriate and necessary security protection,
with respect to your responsibilities as the Under Secretary of Defense
(Comptroller)?
Answer. Yes
Question. Do you agree to ensure that testimony, briefings, and
other communications of information are provided to this Committee and
its staff and other appropriate committees in a timely manner?
Answer. Yes.
Question. Do you agree to provide documents, including copies of
electronic forms of communication, in a timely manner when requested by
a duly constituted committee, or to consult with the Committee
regarding the basis for any good faith delay or denial in providing
such documents?
Answer. Yes.
------
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator David Perdue
waste and travel overpayments at dod
1. Senator Perdue. Mr. Norquist, we briefly discussed waste and
travel overpayments as an example of how the Department of Defense
(DOD) currently lacks a culture of financial accountability. As we
touched on during the hearing DOD spent nearly $6 billion on travel in
fiscal year 2014, $458 million of which, according to the DOD Inspector
General (IG), was improperly paid out because Department officials
simply failed to follow existing policies and procedures. Though the
DOD IG has found these poor financial practices to be pervasive
throughout the Military Services, the Defense Finance and Accounting
Service (DFAS) has yet to implement the sampling recommendations from
the Government Accountability Office (GAO) on this issue, which were
also echoed in a 2016 DOD IG report, for the travel payment program.
How and why does waste of this scale continue to happen, especially
when it is so well documented?
Mr. Norquist. At this time I have limited information about what
actions were or should have been taken in this particular case. If
confirmed, I will look into this issue further and will work to ensure
best practices are in place to prevent improper payments.
2. Senator Perdue. Mr. Norquist, what do you plan to do to stop
this kind of senseless waste?
Mr. Norquist. There are two steps to fighting this type of waste.
First is to evaluate where the Department or Service is at risk of
making improper payments and to use a statistically valid method to
determine the actual error rate. This lets you know where to focus your
effort. The second step is once a problem area is identified, determine
the root cause of the error so that the Department or Service can
implement an effective corrective action plan.
3. Senator Perdue. Mr. Norquist, do you know who, if anyone, got
fired for this?
Mr. Norquist. I currently do not have access to any information on
DOD personnel actions.
4. Senator Perdue. Mr. Norquist, would you fire someone for this?
Mr. Norquist. Because I do not currently have access to the
relevant information, I am not in a position to comment on any proposed
disciplinary actions I may have recommended in this particular
situation.
5. Senator Perdue. Mr. Norquist, would you have fired someone over
this report?
Mr. Norquist. Because I do not currently have access to the
relevant information, I am not in a position to comment on any proposed
disciplinary actions I may have recommended in this particular
situation.
6. Senator Perdue. Mr. Norquist, we talk about needing more money
for defense--what could the Department have bought it if wasn't wasting
half a billion-plus a year on improper payments?
Mr. Norquist. It is not clear to me from the report what amount
would have been saved if the payments had been made properly. If a
reviewer approves a travel payment without properly checking the
invoices, then the total payment is deemed ``improper''. This is a
serious issue from an internal control perspective. But, further
investigation would be required to determine if a proper review would
have resulted in a different payment. Should I be confirmed, I would
look into the level of waste that occurs with improper payments and
take the necessary corrective actions.
the demonstrated need for improved financial management
7. Senator Perdue. Mr. Norquist, the Marine Corps demonstrated that
for every $1 it spent on audit, it realized $3 in value from improved
financial controls. By the Marine Corps' account, their audit freed up
enough money in their budget to buy an additional cobra attack
helicopter, three M1A1 Abrams tanks, or 70 million additional rounds of
ammunition. Will you commit to leveraging the work the Marine Corps
already did to quantify the value of the audit efforts and apply
lessons learned across the Department?
Mr. Norquist. I am not aware of the savings the Marine Corps has
realized from implementing the audit. Should I be confirmed, I would be
very interested in learning more and sharing these best practices
across the Department.
8. Senator Perdue. Mr. Norquist, would you commit to updating
Congress on how much you're able to find by the time you come up to
talk about next year's budget request?
Mr. Norquist. Should I be confirmed, I would be happy to provide
updates to Congress on the progress of the audit and what improvements
or savings the services are seeing as a result of their efforts.
asset valuation in the audit process
9. Senator Perdue. Mr. Norquist, in your prepared statements to the
Committee, you state that there is ``very little merit'' in valuing old
assets for which the relevant documentation is no longer available and
the cost of valuation would be so high; rather, that the practice of
valuing assets should begin with new assets so the data is most
accurate, and then the value of older assets can be estimated in
comparison. How would this approach save time and taxpayer dollars?
Mr. Norquist. This approach protects taxpayer money by focusing the
spending on where it will make the greatest difference. For example, it
would be very expensive to try and locate or recreate the cost records
for old equipment. In addition, the value of an asset must be
depreciated for every year it is in service, which means it has only a
fraction of the impact on the financial statement of a piece of new
equipment. Finally, over the first several years of the audit, some of
that equipment will be retired and any effort spent valuing it would
have been wasted. In contrast, new equipment will be in the inventory
the longest, has the highest value, and also the most accessible
records for calculating its valuation. By starting here and
establishing a cost effective and sustainable process for valuing these
assets, you have created a solution that will be used on into the
future.
Questions Submitted by Senator Dan Sullivan
shifting the alaska cost vs location narrative
10. Senator Sullivan. Mr. Norquist, Alaska is traditionally viewed
as the most expensive CONUS [Continental United States] and least
forward OCONUS [Outside the Continental United States] location. This
``glass half-empty'' vantage point prevents the Department of Defense
(DOD) from capitalizing on the strategic location and resources in
Alaska. What is your opinion on this issue, and can I get your
commitment to approach Alaska with a ``glass half-full'' perspective as
the furthest CONUS and least-expensive OCONUS location?
Mr. Norquist. Given its importance to our national security, I do
not view Alaska as a ``glass half-empty.'' Alaska's location and
resources play a unique and essential role in U.S. military strategy.
fiscal year 2017 ndaa acquisition changes impact
11. Senator Sullivan. Mr. Norquist, considerable changes were made
to the acquisition process in the Fiscal Year 2017 NDAA. What effect
will this have on acquisition reform in respect to the office of the
Comptroller?
Mr. Norquist. I understand the Department is still working through
its approach to implementing the acquisition provisions of the Fiscal
Year 2017 NDAA, so I do not know the implications for the Office of the
Comptroller at this time.
12. Senator Sullivan. Mr. Norquist, can you describe how these
changes will help or hinder your role?
Mr. Norquist. I do not have enough information on the Department's
implementation plan to determine if these changes will help or hinder
the role of the Comptroller. Should I be confirmed, I would be glad to
look into this and would be willing to discuss this with you at an
appropriate time.
______
[The nomination reference of The Honorable David L.
Norquist follows:]
Nomination Reference and Report
As In Executive Session,
Senate of the United States,
April 6, 2017.
Ordered, That the following nomination be referred to the Committee
on Armed Services:
David L. Norquist, of Virginia, to be Under Secretary of Defense
(Comptroller), vice Michael J. McCord.
______
[The biographical sketch of The Honorable David L.
Norquist, which was transmitted to the Committee at the time
the nomination was referred, follows:]
Biographical Sketch of The Honorable David L. Norquist
Education:
The University of Michigan, College of Literature,
Science and the Arts
- Attended: September 1984 to April 1989
- Degree: B.A. in Political Science
The University of Michigan, Gerald R. Ford School of
Public Policy
- Attended: September 1987 to April 1989
- Degree: Master of Public Policy
Georgetown University
- Attended: September 1991 to February 1995
- Degree: Master of Arts (National Security Studies Program)
Employment Record:
Kearney and Company
- Partner
- Alexandria, VA
- December 2008 to Present
Department of Homeland Security (DHS)
- Chief Financial Officer
- Washington, DC
- June 2006 to December 2008
Department of Defense, Office of the Under Secretary of
Defense (Comptroller)
- Deputy Under Secretary of Defense
- Washington, DC (Pentagon)
- December 2002 to June 2006
U.S. House of Representatives. House Appropriations
Committee, Subcommittee on Defense
- Professional Staff
- Washington, DC
- January 1997 to December 2002
U.S. Army Intelligence and Security Command (INSCOM)
- Director, Resource Management, Meriwith Hill Station
- Harrogate, UK
- December 1995 to January 1997
U.S. Army Intelligence and Security Command
- Senior Consolidated Cryptologic Program (CCP) Program/Budget
Analyst
- Fort Meade, MD
- June (est.) 1993 to December 1995
Department of the Army, Deputy Chief of Staff for
Intelligence
- National Foreign Intelligence Program (NFIP) Program/Budget
Analyst
- Washington, DC (Pentagon)
- August 1989 to June (est.) 1993
Honors and Awards:
Federal Civilian Awards
- Presidential Management Intern, 1989 to 1991 (Now called
Fellows or PMF)
- Distinguished Academic Graduate, Military Intelligence
Officer Basic Course, 1990 (Attended as a civilian)
- Army Commander's Award for Civilian Service Medal, 1996
- Joint Meritorious Unit Award to the Office of the Secretary
of Defense, 2003
- Department of State Superior Honor Award (Group), 2003 and
2004
- Secretary of Defense Medal For Exceptional Public Service,
2004
- Secretary of Defense Medal for Outstanding Public Service,
2006
- United States Coast Guard Distinguished Public Service
Award, 2008
- Secretary of Homeland Security Outstanding Service Medal,
2008
Academic Awards
- Graduated from University of Michigan with ``High
Distinction'', 1989
Other Awards
- Certified Government Financial Manager (CGFM), 2014
______
[The Committee on Armed Services requires all individuals
nominated from civilian life by the President to positions
requiring the advice and consent of the Senate to complete a
form that details the biographical, financial, and other
information of the nominee. The form executed by The Honorable
David L. Norquist in connection with his nomination follows:]
UNITED STATES SENATE
COMMITTEE ON ARMED SERVICES
Room SR-228
Washington, DC 20510-6050
(202) 224-3871
COMMITTEE ON ARMED SERVICES FORM
BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF NOMINEES
Instructions to the Nominee: Complete all requested information. If
more space is needed, use an additional sheet and cite the part of the
form and the question number (i.e. A-9, B-4) to which the continuation
of your answer applies.
part a--biographical information
Instructions to the Nominee: Biographical information furnished in
this part of the form will be made available in Committee offices for
public inspection prior to the hearing and will also be published in
any hearing record as well as made available to the public.
1. Name: (Include any former names used.)
David Lutz Norquist
2. Position to which nominated:
Under Secretary of Defense (Comptroller) and Chief Financial
Officer
3. Date of nomination:
April 6, 2017.
4. Address: (List current place of residence and office addresses.)
[The nominee responded and the information is contained in the
Committee's executive files.]
5. Date and place of birth:
1966, Concord, MA.
6. Marital status: (Include maiden name of wife or husband's name.)
Married to Stephanie Rae Norquist (Formerly Stephanie Kristich).
7. Names and ages of children:
Three children all under 18.
8. Education: List secondary and higher education institutions,
dates attended, degree received and date degree granted.
The University of Michigan, College of Literature,
Science and the Arts
- Attended: September 1984 to April 1989
- Awarded B.A. in Political Science, April 1989
The University of Michigan, Gerald R. Ford School of
Public Policy
- Attended: September 1987 to April 1989
- Awarded Master of Public Policy, April 1989
Georgetown University
- Attended: September 1991 to February 1995
- Awarded Master of Arts, February 1995 (National Security
Studies Program)
9. Employment record: List all jobs held since college or in the
last 10 years, whichever is less, including the title or description of
job, name of employer, location of work, and dates of employment.
Department of Homeland Security (DHS)
- Chief Financial Officer
- Washington, DC
- June 2006 to December 2008
Kearney and Company
- Partner
- Alexandria, VA
- December 2008 to Present
10. Government experience: List any advisory, consultative,
honorary or other part-time service or positions with Federal, State,
or local governments, other than those listed above.
Participated as an uncompensated, advisory panel member
providing support to the DHS National Protection and Programs
Directorate. The study was led by the Institute for Defense Analysis.
11. Business relationships: List all positions currently held as an
officer, director, trustee, partner, proprietor, agent, representative,
or consultant of any corporation, company, firm, partnership, or other
business enterprise, educational or other institution.
Not Applicable.
12. Memberships: List all memberships and offices currently held in
professional, fraternal, scholarly, civic, business, charitable and
other organizations.
Member of the American Society of Military Comptrollers
Member of the Association of Government Accountants
Journal Editorial Board, Association of Government
Accountants
Rivendell School Scholarship Committee (K through 8)
Member of the National Rifle Association
Member of the Falls Church Anglican
In the past, I have been a member of the Association of the U.S.
Army, the Alumni Association of the University of Michigan and the
National Defense Industrial Association, but I do not know if any of
these memberships are still current.
13. Political affiliations and activities:
(a) List all offices with a political party which you have held or
any public office for which you have been a candidate.
No.
(b) List all memberships and offices held in and services rendered
to all political parties or election committees during the last 5
years.
Member of the National and Virginia Republican Party.
(c) Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $100 or more for the past 5 years.
Republican National Committee 2/29/2012 $330
Republican National Committee 5/11/2012 $300
Republican National Committee 10/08/2014 $300
Romney for President 5/21/2012 $250
Romney for President 9/10/2012 $500
Scott Walker 3/16/2012 $100
Scott Walker 6/4/2012 $100
Scott Walker 10/10/2014 $250
David McIntosh 2/29/2012 $250
Marco Rubio 2/26/2016 $100
(To the best of my knowledge this is complete. I used online
donor search tools to identify my contributions.)
14. Honors and Awards: List all scholarships, fellowships, honorary
society memberships, military medals and any other special recognitions
for outstanding service or achievements.
Graduated from University of Michigan with ``High
Distinction'', 1989
Presidential Management Intern, 1989 to 1991 (Now
called Fellows or PMF)
Army Commander's Award for Civilian Service Medal, 1996
Joint Meritorious Unit Award to the Office of the
Secretary of Defense, 2003
Department of State Superior Honor Award (Group), 2003
and 2004
Secretary of Defense Medal For Exceptional Public
Service, 2004
Secretary of Defense Medal for Outstanding Public
Service, 2006
United States Coast Guard Distinguished Public Service
Award, 2008
Secretary of Homeland Security Outstanding Service
Medal, 2008
Certified Government Financial Manager (CGFM), 2014
While I have received additional recognition in my career, those
listed above are the most relevant and significant.
15. Published writings: List the titles, publishers, and dates of
books, articles, reports, or other published materials which you have
written.
DHS: The Road to a `Clean' Opinion. Journal of
Government Financial Management, Summer 2014.
The Defense Budget: Is it Transformational? Joint Force
Quarterly, Summer 2002.
16. Speeches: Provide the Committee with two copies of any formal
speeches you have delivered during the last 5 years of which you have
copies and are on topics relevant to the position for which you have
been nominated.
I have given several talks related to Federal financial
management. Typically the audience is members of the American Society
of Military Comptrollers (ASMC) or the Association of Government
Accountants (AGA). I do not use formal written speeches, so instead I
have provided two copies of the slides that I used. Where I have given
the same presentation several times. I have included only one version
of the slides.
17. Commitments regarding nomination, confirmation, and service:
(a) Have you adhered to applicable laws and regulations governing
conflicts of interest?
Yes.
(b) Have you assumed any duties or undertaken any actions which
would appear to presume the outcome of the confirmation process?
No.
(c) If confirmed, will you ensure your staff complies with
deadlines established for requested communications, including questions
for the record in hearings?
Yes.
(d) Will you cooperate in providing witnesses and briefers in
response to congressional requests?
Yes.
(e) Will those witnesses be protected from reprisal for their
testimony or briefings?
Yes.
(f) Do you agree, if confirmed, to appear and testify upon request
before this Committee?
Yes.
(g) Do you agree to provide documents, including copies of
electronic forms of communication, in a timely manner when requested by
a duly constituted committee, or to consult with the Committee
regarding the basis for any good faith delay or denial in providing
such documents?
Yes.
______
[The nominee responded to Parts B-F of the Committee
questionnaire. The text of the questionnaire is set forth in
the Appendix to this volume. The nominee's answers to Parts B-F
are contained in the Committee's executive files.]
------
Signature and Date
I hereby state that I have read and signed the foregoing Statement
on Biographical and Financial Information and that the information
provided therein is, to the best of my knowledge, current, accurate,
and complete.
David Lutz Norquist
This 8th day of April, 2017
______
[The nomination of The Honorable David L. Norquist was
reported to the Senate by Chairman McCain on May 23, 2017, with
the recommendation that the nomination be confirmed. The
nomination was confirmed by the Senate on May 25, 2017.]
[all]