currently only 2 co-sponsors: wyden and cruz
The Text is online now:
[Congressional Bills 114th Congress]
[From the U.S. Government Printing Office]
[S. 300 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 300
To provide for auditable financial statements for the Department of
Defense, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 29, 2015
Mr. Paul (for himself, Mr. Wyden, and Mr. Cruz) introduced the
following bill; which was read twice and referred to the Committee on
Armed Services
_______________________________________________________________________
A BILL
To provide for auditable financial statements for the Department of
Defense, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Audit the Pentagon Act of 2015''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Section 9 of Article I of the Constitution of the
United States requires all agencies of the Federal Government,
including the Department of Defense, to publish ``a regular
statement and account of the receipts and expenditures of all
public money''.
(2) Section 3515 of title 31, United States Code, requires
the agencies of the Federal Government, including the
Department of Defense, to present auditable financial
statements beginning not later than March 1, 1997. The
Department has not complied with this law.
(3) The Federal Financial Management Improvement Act of
1996 (31 U.S.C. 3512 note) requires financial systems acquired
by the Federal Government, including the Department of Defense,
to be able to provide information to leaders to manage and
control the cost of Government. The Department has not complied
with this law.
(4) The financial management of the Department of Defense
has been on the ``High-Risk'' list of the Government
Accountability Office, which means that the Department is not
consistently able to ``control costs; ensure basic
accountability; anticipate future costs and claims on the
budget; measure performance; maintain funds control; [and]
prevent and detect fraud, waste, and abuse''.
(5) The National Defense Authorization Act for Fiscal Year
2002 (Public Law 107-107) requires the Secretary of Defense to
report to Congress annually on the reliability of the financial
statements of the Department of Defense, to minimize resources
spent on producing unreliable financial statements, and to use
resources saved to improve financial management policies,
procedures, and internal controls.
(6) In 2005, the Department of Defense created a Financial
Improvement and Audit Readiness (FIAR) Plan, overseen by a
directorate within the office of the Under Secretary of Defense
(Comptroller), to improve Department business processes with
the goal of producing timely, reliable, and accurate financial
information that could generate an audit-ready annual financial
statement. In December 2005, that directorate, known as the
FIAR Directorate, issued the first of a series of semiannual
reports on the status of the Financial Improvement and Audit
Readiness Plan.
(7) The National Defense Authorization Act for Fiscal Year
2010 (Public Law 111-84) requires regular status reports on the
Financial Improvement and Audit Readiness Plan described in
paragraph (6), and codified as a statutory requirement the goal
of the Plan in ensuring that Department of Defense financial
statements are validated as ready for audit not later than
September 30, 2017. In addition, the National Defense
Authorization Act for Fiscal Year 2013 (Public Law 112-239)
requires that the statement of budgetary resources of the
Department of Defense be validated as ready for audit by not
later than September 30, 2014.
(8) At a September 2010 hearing of the Senate, the
Government Accountability Office stated that past expenditures
by the Department of Defense of $5,800,000,000 to improve
financial information, and billions of dollars more of
anticipated expenditures on new information technology systems
for that purpose, may not suffice to achieve full audit
readiness of the financial statement of the Department. At that
hearing, the Government Accountability Office could not predict
when the Department would achieve full audit readiness of such
statements.
(9) At a 2013 hearing of the Senate, Secretary of Defense
Chuck Hagel affirmed his commitment to audit-ready budget
statements for the Department of Defense by the end of 2014,
and stated that he ``will do everything he can to fulfill this
commitment''. At that hearing, Secretary Hagel noted that
auditable financial statements were essential to the Department
not only for improving the quality of its financial
information, but also for reassuring the public and Congress
that it is a good steward of public funds.
SEC. 3. CESSATION OF APPLICABILITY OF REPORTING REQUIREMENTS REGARDING
THE FINANCIAL STATEMENTS OF THE DEPARTMENT OF DEFENSE.
(a) Cessation of Applicability.--
(1) Military departments.--The financial statements of a
military department shall cease to be covered by the reporting
requirements specified in subsection (b) upon the issuance of
an unqualified audit opinion on such financial statements.
(2) Department of defense.--The reporting requirements
specified in subsection (b) shall cease to be effective when an
unqualified audit opinion is issued on the financial statements
of the Department of Defense, including each of the military
departments and the other reporting entities defined by the
Office of Management and Budget.
(b) Reporting Requirements.--The reporting requirements specified
in this subsection are the following:
(1) The requirement for annual reports in section 892(b) of
the Ike Skelton National Defense Authorization Act for Fiscal
Year 2011 (Public Law 111-383; 124 Stat. 4311; 10 U.S.C. 2306a
note).
(2) The requirement for semi-annual reports in section
1003(b) of the National Defense Authorization Act for Fiscal
Year 2010 (Public Law 111-84; 123 Stat. 2440; 10 U.S.C. 2222
note).
(3) The requirement for annual reports in section 817(d) of
the Bob Stump National Defense Authorization Act for Fiscal
Year 2003 (10 U.S.C. 2306a note).
(4) The requirement for annual reports in section 1008(a)
of the National Defense Authorization Act for Fiscal Year 2002
(Public Law 107-107; 115 Stat. 1204; 10 U.S.C. 113 note).
(5) The requirement for periodic reports in section 908(b)
of the Defense Acquisition Improvement Act of 1986 (Public Law
99-500; 100 Stat. 1783-140; 10 U.S.C. 2326 note) and duplicate
requirements as provided for in section 6 of the Defense
Technical Corrections Act of 1987 (Public Law 100-26; 101 Stat.
274; 10 U.S.C. 2302 note).
SEC. 4. ENHANCED REPROGRAMMING AUTHORITY FOLLOWING ACHIEVEMENT BY
DEPARTMENT OF DEFENSE AND MILITARY DEPARTMENTS OF AUDIT
WITH UNQUALIFIED OPINION OF STATEMENT OF BUDGETARY
RESOURCES FOR FISCAL YEARS AFTER FISCAL YEAR 2015.
(a) Department of Defense Generally.--Subject to section 6(1), if
the Department of Defense obtains an audit with an unqualified opinion
on its statement of budgetary resources for any fiscal year after
fiscal year 2015, the limitation on the total amount of authorizations
that the Secretary of Defense may transfer pursuant to general transfer
authority available to the Secretary in the national interest in the
succeeding fiscal year shall be $8,000,000,000.
(b) Military Departments, Defense Agencies, and Defense Field
Activities.--Subject to section 7(a), if a military department, Defense
Agency, or defense field activity obtains an audit with an unqualified
opinion on its statement of budgetary resources for any fiscal year
after fiscal year 2015, the thresholds for reprogramming of funds of
such military department, Defense Agency, or defense field activity, as
the case may be, without prior notice to Congress for the succeeding
fiscal year shall be deemed to be the thresholds as follows:
(1) In the case of an increase or decrease to the program
base amount for a procurement program, $60,000,000.
(2) In the case of an increase or decrease to the program
base amount for a research program, $30,000,000.
(3) In the case of an increase or decrease to the amount
for a budget activity for operation and maintenance,
$45,000,000.
(4) In the case of an increase or decrease to the amount
for a budget activity for military personnel, $30,000,000.
(c) Construction.--Nothing in this section shall be construed to
alter or revise any requirement (other than a threshold amount) for
notice to Congress on transfers covered by subsection (a) or
reprogrammings covered by subsection (b) under any other provision of
law.
(d) Definitions.--In this section, the terms ``program base
amount'', ``procurement program'', ``research program'', and ``budget
activity'' have the meanings given such terms in chapter 6 of volume 3
of the Financial Management Regulation of the Department of Defense
(DoD 7000.14R), dated March 2011, or any successor document.
SEC. 5. FAILURE TO OBTAIN AUDITS WITH UNQUALIFIED OPINION OF FISCAL
YEAR 2016 GENERAL FUND STATEMENT OF BUDGETARY RESOURCES
OF THE DEPARTMENT OF DEFENSE.
(a) In General.--If the Department of Defense fails to obtain an
audit with an unqualified opinion on its general fund statement of
budgetary resources for fiscal year 2016 by December 31, 2016, the
following shall take effect on January 1, 2017:
(1) Additional qualifications and duties of usd
(comptroller).--
(A) Qualifications.--Any individual nominated for
appointment to the position of Under Secretary of
Defense (Comptroller) under section 135 of title 10,
United States Code, shall be an individual who has
served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Duties and powers.--The duties and powers of
the individual serving as Under Secretary of Defense
(Comptroller) shall include, in addition to the duties
and powers specified in section 135(c) of title 10,
United States Code, such duties and powers with respect
to the financial management of the Department of
Defense as the Deputy Secretary of Defense (acting in
the capacity of Chief Management Officer of the
Department of Defense) or a successor official in the
Department of Defense (acting in such capacity) may
prescribe.
(2) Additional qualifications and responsibilities of asa
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Army for Financial Management under section 3016 of
title 10, United States Code, shall be an individual
who has served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Army
for Financial Management shall include, in addition to
the responsibilities specified in section 3016(b)(4) of
title 10, United States Code, such responsibilities as
the Deputy Secretary of Defense (acting in the capacity
of Chief Management Officer of the Department of
Defense) or a successor official in the Department of
Defense (acting in such capacity) may prescribe.
(3) Additional qualifications and responsibilities of asn
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Navy for Financial Management under section 5016 of
title 10, United States Code, shall be an individual
who has served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Navy
for Financial Management shall include, in addition to
the responsibilities specified in section 5016(b)(4) of
title 10, United States Code, such responsibilities as
the Deputy Secretary of Defense (acting in the capacity
of Chief Management Officer of the Department of
Defense) or a successor official in the Department of
Defense (acting in such capacity) may prescribe.
(4) Additional qualifications and responsibilities of asaf
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Air Force for Financial Management under section
8016 of title 10, United States Code, shall be an
individual who has served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Air
Force for Financial Management shall include, in
addition to the responsibilities specified in section
8016(b)(4) of title 10, United States Code, such
responsibilities as the Deputy Secretary of Defense
(acting in the capacity of Chief Management Officer of
the Department of Defense) or a successor official in
the Department of Defense (acting in such capacity) may
prescribe.
(b) Public Company Defined.--In this section, the term ``public
company'' has the meaning given the term ``issuer'' in section 2(a)(7)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)(7)).
SEC. 6. FAILURE OF THE DEPARTMENT OF DEFENSE TO OBTAIN AUDITS WITH
UNQUALIFIED OPINION OF FISCAL YEAR 2018 FINANCIAL
STATEMENTS.
If the Department of Defense fails to obtain an audit with an
unqualified opinion on its general fund statement of budgetary
resources for fiscal year 2018 by December 31, 2018:
(1) Permanent cessation of enhanced general transfer
authority.--Effective as of January 1, 2019, the authority in
section 4(a) shall cease to be available to the Department of
Defense for fiscal year 2018 and any fiscal year thereafter.
(2) Reorganization of responsibilities of chief management
officer.--Effective as of April 1, 2019:
(A) Position of chief management officer.--Section
132a of title 10, United States Code, is amended to
read as follows:
``Sec. 132a. Chief Management Officer
``(a) In General.--(1) There is a Chief Management Officer of the
Department of Defense, appointed from civilian life by the President,
by and with the advice and consent of the Senate.
``(2) Any individual nominated for appointment as Chief Management
Officer shall be an individual who has--
``(A) extensive executive level leadership and management
experience in the public or private sector;
``(B) strong leadership skills;
``(C) a demonstrated ability to manage large and complex
organizations; and
``(D) a proven record in achieving positive operational
results.
``(b) Powers and Duties.--The Chief Management Officer shall
perform such duties and exercise such powers as the Secretary of
Defense may prescribe.
``(c) Service as Chief Management Officer.--(1) The Chief
Management Officer is the Chief Management Officer of the Department of
Defense.
``(2) In serving as the Chief Management Officer of the Department
of Defense, the Chief Management Officer shall be responsible for the
management and administration of the Department of Defense with respect
to the following:
``(A) The expenditure of funds, accounting, and finance.
``(B) Procurement, including procurement of any enterprise
resource planning (ERP) system and any information technology
(IT) system that is a financial feeder system, human resources
system, or logistics system.
``(C) Facilities, property, nonmilitary equipment, and
other resources.
``(D) Strategic planning, annual performance planning, and
identification and tracking of performance measures.
``(E) Internal audits and management analyses of the
programs and activities of the Department, including the
Defense Contract Audit Agency.
``(F) Such other areas or matters as the Secretary of
Defense may designate.
``(3) The head of the Defense Contract Audit Agency shall be under
the supervision of, and shall report directly to, the Chief Management
Officer.
``(d) Precedence.--The Chief Management Officer takes precedence in
the Department of Defense after the Secretary of Defense and the Deputy
Secretary of Defense.''.
(B) Conforming amendments.--
(i) Section 131(b) of title 10, United
States Code, is amended--
(I) by striking paragraph (3);
(II) by redesignating paragraph (2)
as paragraph (3); and
(III) by inserting after paragraph
(1) the following new paragraph (2):
``(2) The Chief Management Officer of the Department of
Defense.''.
(ii) Section 132 of such title is amended--
(I) by striking subsection (c); and
(II) by redesignating subsections
(d) and (e) as subsections (c) and (d),
respectively.
(iii) Section 133(e)(1) of such title is
amended by striking ``and the Deputy Secretary
of Defense'' and inserting ``, the Deputy
Secretary of Defense, and the Chief Management
Officer of the Department of Defense''.
(iv) Such title is further amended by
inserting ``the Chief Management Officer of the
Department of Defense,'' after ``the Deputy
Secretary of Defense,'' each place it appears
in the provisions as follows:
(I) Section 133(e)(2).
(II) Section 134(c).
(v) Section 137a(d) of such title is
amended by striking ``the Secretaries of the
military departments,'' and all that follows
and inserting ``the Chief Management Officer of
the Department of Defense, the Secretaries of
the military departments, and the Under
Secretaries of Defense.''.
(vi) Section 138(d) of such title is
amended by striking ``the Secretaries of the
military departments,'' and all that follows
through the period and inserting ``the Chief
Management Officer of the Department of
Defense, the Secretaries of the military
departments, the Under Secretaries of Defense,
and the Director of Defense Research and
Engineering.''.
(C) Clerical amendment.--The table of sections at
the beginning of chapter 4 of such title is amended by
striking the item relating to section 132a and
inserting the following new item:
``132a. Chief Management Officer.''.
(D) Executive schedule.--Section 5313 of title 5,
United States Code, is amended by adding at the end the
following:
``Chief Management Officer of the Department of Defense.''.
(E) Reference in law.--Any reference in any
provision of law to the Chief Management Officer of the
Department of Defense shall be deemed to refer to the
Chief Management Officer of the Department of Defense
under section 132a of title 10, United States Code (as
amended by this paragraph).
(3) Jurisdiction of dfas.--Effective as of April 1, 2019:
(A) Transfer to department of the treasury.--
Jurisdiction of the Defense Finance and Accounting
Service (DFAS) is transferred from the Department of
Defense to the Department of the Treasury.
(B) Administration.--The Secretary of the Treasury
shall administer the Defense Finance and Accounting
Service following transfer under this paragraph through
the Financial Management Service of the Department of
the Treasury.
(C) Memorandum of understanding.--The Secretary of
Defense and the Secretary of the Treasury shall jointly
enter into a memorandum of understanding regarding the
transfer of jurisdiction of the Defense Finance and
Accounting Service under this paragraph. The memorandum
of understanding shall provide for the transfer of the
personnel and other resources of the Service to the
Department of the Treasury and for the assumption of
responsibility for such personnel and resources by the
Department of the Treasury.
(D) Construction.--Nothing in this paragraph shall
be construed as terminating, altering, or revising any
responsibilities or authorities of the Defense Finance
and Accounting Service (other than responsibilities and
authorities in connection with the exercise of
jurisdiction of the Service following transfer under
this paragraph).
SEC. 7. FAILURE OF THE MILITARY DEPARTMENTS TO OBTAIN AUDITS WITH
UNQUALIFIED OPINION OF FINANCIAL STATEMENTS FOR FISCAL
YEARS AFTER FISCAL YEAR 2017.
(a) Permanent Cessation of Authorities on Reprogramming of Funds.--
If a military department fails to obtain an audit with an unqualified
opinion on its financial statements for fiscal year 2018 by December
31, 2018, effective as of January 1, 2019, the authorities in section
4(b) shall cease to be available to the military department for fiscal
year 2018 and any fiscal year thereafter.
(b) Annual Prohibition on Expenditure of Funds for Certain MDAPs
Past Milestone B in Connection With Failure.--
(1) Prohibition.--Effective for fiscal years after fiscal
year 2017, if a military department fails to obtain an audit
with an unqualified opinion on its financial statements for any
fiscal year, effective as of the date of the issuance of the
opinion on such audit, amounts available to the military
department for the following fiscal year may not be obligated
by the military department for a weapon or weapon system or
platform being acquired as a major defense acquisition program
for any activity beyond Milestone B approval unless such
program has already achieved Milestone B approval of the date
of the issuance of the opinion on such audit.
(2) Definitions.--In this subsection:
(A) The term ``major defense acquisition program''
has the meaning given that term in section 2430 of
title 10, United States Code.
(B) The term ``Milestone B approval'' has the
meaning given that term in section 2366(e)(7) of title
10, United States Code.
SEC. 8. ENTERPRISE RESOURCE PLANNING.
The Secretary of Defense shall amend the acquisition guidance of
the Department of Defense to provide for the following:
(1) The Defense Business System Management Committee may
not approve procurement of any Enterprise Resource Planning
(ERP) business system that is independently estimated to take
longer than three years to procure from initial obligation of
funds to full deployment and sustainment.
(2) Any contract for the acquisition of an Enterprise
Resource Planning business system shall include a provision
authorizing termination of the contract at no cost to the
Government if procurement of the system takes longer than three
years from initial obligation of funds to full deployment and
sustainment.
(3) Any implementation of an Enterprise Resource Planning
system shall comply with each of the following:
(A) The current Business Enterprise Architecture
established by the Chief Management Officer of the
Department of Defense.
(B) The provisions of section 2222 of title 10,
United States Code.
(4) The Deputy Secretary of Defense (acting in the capacity
of Chief Management Officer of the Department of Defense) or a
successor official in the Department of Defense (acting in such
capacity) shall have the authority to replace any program
manager (whether in a military department or a Defense Agency)
for the procurement of an Enterprise Resource Planning business
system if procurement of the system takes longer than three
years from initial obligation of funds to full deployment and
sustainment.
(5) Any integrator contract for the implementation of an
Enterprise Resource Planning business system shall only be
awarded to companies that have a history of successful
implementation of other Enterprise Resource Planning business
systems for the Federal Government (whether with the Department
of Defense or another department or agency of the Federal
Government), including meeting cost and schedule goals.
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