Transcripts For CSPAN3 Defense Department Financial Management 20180110

The committee will come to order. The Committee Welcomes mr. David norquist comptroller as our witness today. The topic is the audit of the department of defense, which by law begins this fiscal year. And i would just say its not by accident that the committee will start our year on this topic. Requiring that the Department Conduct an audit has been a bipartisan priority of this committee for some time. The chief Financial Office of 1990 required all federal departments conducted annual financial audit and partly out of frustration with a lack of progress toward that end that the department of defense. The 2010 required the Financial Statements of the department be ready for audit by september 30, 2017. This committees panel on defense Financial Management and reform put close scrutiny on the departments efforts and issued a number of recommendations that have been enabled us to arrive at this point. The 2014 required a full audit be conducted of the departments fy 18 Financial Statements. The results of which are to be delivered next year. You want to commend the chairman for his expertise and persistence on this issue, as well as mr. Courtney, who is also a member of the audit panel several years ago. They will be both glad to know we have had additional members join this e committee in recent years who can also contribute their background and experience to this issue as it moves ahead. This issue is important. Members of this committee hear evidence every week that we are not providing our military with the funding they need to carry out the missions they have been assigned. E we must spend more. At the same time, we have a responsibility the American People to see that each of their tax dollars being spent to protect them is being spent in a transparent way with appropriate accountability. We should never assume that an audit will solve all the problems of waste and inefficiency, but it seems to me spending money smarter is knowing with certainty how it is being spent. It is likely that the result of the first audit will not be pretty. But those results will help direct us all, congress and the. Department, on where we need to apply our efforts to improve. This issue is important. This committee will continue to pursue it. The Ranking Member is recogni recognized. Thank you, mr. Chairman. I would simply repeat word for word the Opening Statement of the chairman. So in the interest of time, i wont do that. And will simplify it by saying this is enormously important. There are a lot of concerns at the pentagon, and theres really two big issue heres. One, as the chairman mentioned, we are in a time of tight resources and very great needs. And that means we have to get everything we can out of every dollar we spend. There are many, many issues that this committee has covered that make that clear. And second, if we cant explain where we spend the money in the pentagon, we are failing in that first mission. I know its a lot of money. I know its big bureaucracy, theres a lot going on, but we ought to be able to do an audit that tells us where were spending the money. Its the pentagons mission. I want to thank mr. Conway for his great leadership in this issue. Who knew having an accountant on the committee would be critical. Actually, most people should have known that. But hes done a great job on this issue. Everybody on this committee would just feel great if at some point we can say the pentagon has been audited. It has happened some 20 years after we started trying to make it. Happen. I think were close. I think we can get there. I look forward to hearing your testimony about how were progressing in that. I thank the chairman for his leadership on this very important issue. I thank the gentleman. Welcome. Without objection your full written statement will be made part of the record. You are recognized to make any oral comments you wish to make. Thank you, mr. Chairman. Chairman thornberry, rank iing member and members of the committee, thank you for the opportunity to provide an joefr view of the departments Financial Statement progress and plans. I appreciate your committees long and unwavering support for this effort. I also want to thank congressman conway tr his leadership over the years related to the audit. His direction of the committees 2011 panel on Financial Management helped the department maintain its focus on audit. To rebuild the armed forces he also made a commitment to start the audit. Inside the department of defense, secretary mattis and shanahan have set a tone from the top that embraces the audit as part of their vision to bring business reform to the department of defense. I know you have had many hearings where witnesses told you they support the start of an audit. This hearing is different. We have started the audit. But we are only able to have todays hearing with the department of defense under its first full Financial Statement audit because of this committees continued support. I should note that audits themselves are not new to the department of defense. Numerous audits covering Program Performance and contract kos are completed each year by the accountability office, Defense Contract Audit Agency, the department of Defense Office of the Inspector General and the Service Audit u agencies. Dcaa employs over 4,000 auditors to perform contract audits for contractors to the government. This is the first time that the department is undergoing a full Financial Statement audit. A Financial Statement audit is comprehensive. It occurs annually and covers more than Financial Management. For example, Financial Statement audits include very fine count, location and condition of military equipment, Real Property and inventory. It tests the security vulnerabilities of our Business Systems and validates the accuracy of personal records and actions such as promotions and separations. The department of defense anticipates that this spring and early summer well have approximately 1,200 Financial Statement auditors assessing whether our books and records present a true and accurate picture of our Financial Condition and results of our operations in accordance with accounting standards. These Financial Statement audits compliment but are distinct from Program Performance or contract audits. Based on my experience, it will take time to implement all the processes and system changes necessary to pass the audit. It took the department of Homeland Security a relatively new and smaller enterprise of ten years to get its first opinion. But we dont have to wait for a clean opinion to see the benefits of the audit. The Financial Statement audit helps drive improvements to standardize it business processes and improve the quality of our data. Just like private Sector Companies and other federal agencies, the department of defense prepares Financial Statements every year to report assets, liabilities, revenues and expenses. Though not a corporation, dod owes accountability to the American People. The taxpayers deserve level of confidence that the Financial Statements present a true and accurate position, a picture of the Financial Condition and operations. Tra transparency, accountability and business process reform are some of the benefits of a Financial Statement audit. Regarding transparency, it improves the quality of our Financial Statements and the underlying data we make available to the public. And dods progress will also directly contribute to an audit opinion on the entire federal governments. With regard to accounting, the audit will highlight areas we need to improve accountability. The army found 39 black hawk helicopters that had not been properly recorded in this property system. The air force of 478 buildings and structures that were not in its Real Property system. By fix iing the property record we can help demonstrate the accountability of our assets. In other cases as it informs in new systems, well be able to obtain independent feedback on that systems compliance so we can better hold those venders accountable for their solutions. Third, the combination of better data, business process reengineering and the use of modern Data Analytics supports congresss vision of the chief management officer position and the departments effort to bring business reforms to its operations. These reforms will lead to buzz operations savings that can be reinvested in legality. It will perform the amount covered the audit fees to the Accounting Firms and the infrastructure including the cost of the government salaries of the people supporting the audit of 186 million. The 181 million in audit contract costs is one 30th of 1 of the dod budget. And as a percentage of revenue is equal to or less than a fortune 500 company pays tr their auditors. In addition, we anticipate spending about 551 million in 2018 fixing problems identified by the auditors. The dod consolidated audit will be one of the largest audits ever undertaken and comprises 24 stand alone audits and overarching consolidated aud ut. Dod is sustaining clean opinions for nine stand alone audits. They are conducted by ipa firms with the ig performing the consolidated audit and all the contract audits have been awarded and auditors have begun to arrive. In order to track progress, the department has established a tool and a process to capture, prioritize, assign responsibility for and develop corrective actions for findings. Each year they will assess and report on whether the department has address ed the findings. Going forward, we measure progress and report on it towards achieving a positive opinion by using the number of findings resolved. In closing, i want to thank this committee for its continued focus ob a dod audit. Your oversight has been a cat skplis we appreciate the partnership with you and the Committee Staff on this important process. With your leadership we will now and continue to be a department not only under audit but improving year after year. We improve budget stability and technology and funding to findings remains critical in moving towards achieving a positive opinion. I thank you and look forward to your questions. I appreciate a full financial audit with contract audits. I might just highlight that we had a number of provisions to reform the contract process in the last years Defense Authorization bill and hopefully that will improve as well. I just want to ask you one question. I want interested to read where a retired general says basically this audit is not worth doing. Youve got to check and e see whether the weapons and equipment are accounted for the various records and so forth. Its going to be expensive. And as his point basically is its not worth the cost. Youre doing it because the law requires you to, but what would be your response to the argument that the cost is more than the benefit of doing a full financial audit of the department. I would first respond. He noted its costing over 900 million. The amount were paying the ipa is 181 million is one 30th percent of the budget. But on the scale of the enterprise, that type of money for accountability is is money well spent. The additional money we have talked about is to fix problems that we find. Now this is always a choice Going Forward if we can live with the problem and fix it but i dont think the problem is is the right way u forward. I support the direction to conduct the audit, do the findings. The article said that its expensive because it covers so much. The answer is, yes. Thats it the point. One of the things that the law requires is that we do Information Security of our Business Systems. This is the standards. The audits are done to those. Well be able to understand the weaknesses and do people more to hold people accountable for closing vulnerabilities in our systems. You would want that anyhow. Youd want that done under any circumstance. When we find those, youll. The department to be closing them. You talked about contract aud the its. The Financial Statement is large. We have 4,000 who look at contractors. So on the scale of what we spend looking at contractors, the size of the team that we look at the government is appropriate and proportiona proportionate. The biggest concern is a statement that the department is not a corporation and does not need to undergo a financial audit. First of all, the law requires a financial audit and more importantly, i think the taxpayers deserve at least the same level of confidence as a shareholder in the use of the money. To say its not worth doing that we have screwed it up so bad for so long that the cost of fixing it has just become overwhelming. Let us keep screwing it up. And i get that the up front cost is going to be e enormous. But longterm, the benefits are are exactly as you describe. If we got to suck it up for a couple years and absorb some cost to get back on track, its going to make significant improvements. All of the work on acquisition reform that i know the chairman and many others have done can be so much better informed if we have this information. We can say, gosh, heres an area that instead of so when e we pass legislation aimed at making the acquisition process better, if we have this full audit, that legislation has a much better chance of actually accomplishing that task. So yeah, its pretty bad. I applaud your commitment to doing this and staying ready to have the Committee Help in any u way we can. Ill yield back my time. But i have nothing further. My only comment is who we enforce your point about the better data to support information. The primary thing an audit promises is better data accuracy and accountability. When many of the reforms depend on the accuracy of the da tarks not having that complicates those efforts. Mr. Jones. Chairman, thank you. I have been here 22 years. This is the best news of hoping for something good to come from this effort. I commend my friends on my side and the other side who werent with the chairman. Ranking member that put this effort together. I never will forget donald rumsfeld, the former secretary of defense, sitting where you are telling this committee that he will account for every dollar of the taxpayer and how its going to be spent at the department of defense. He might have meant well, but it never happened obviously. And even in a small way make it r better. I got one question. It does deal not directly with you, but because of your position and your oversight, of all the articles i have seen about waste in the 22 that i have been here, probably this is in the top four or five. Two years ago, accounts by trillions of dollars. The Defense Department Inspector General in a report two years ago. They made a wrongful adjustments to account iing and one quarter alone in 2015 and 6. 5 trillion for the year. It would be under your departments jurisdiction if it happened within the system. Theres got to be fellow accountants to give me some assurance that when stories like this go public, and the taxpayer thats why they are so frustrated on congress. Give me hope this would be dealt with and somebody instead of saying that this happened and that happened, but we keep funding it. I just dont know how you catch up when you keep fund iing the problem. Let me address that. Thats a very important one. One of the issues youre talking about relates to general vouchers which occurs after the money is spent is. When you see in the article that says trillions of dollars and you realize we only receive about 600 billion in a year, theres a mismatch in the story. And what this reforms to is we have systems that do not automatically pass data from one to the other. The oerm goes in and at the end of their Financial Statements, finds the number of the property book and writes it into the general ledger. Thats a journal voucher entry. Depending on the property, that could be hundreds of billions of dollars. The whole entry is considered unsupported. From a management point of view, this is bad. Its not the same thing as being able to account for the Money Congress is giving you to spend, but its a problem that needs to be fixed. We are addressing that challenge. One of my concerns is i only by eliminating the types of ones that are just an entry issue can you find underlying issues that are hidden among inaccurate data. With a loss of something that wouldnt be accurate. But its an accounting problem that does need to be solved because it can help hide other underlying issues. Thank you very much. I will tell you that i might not be here when you resolve the problem, but ill still be reading the paper. I wish you and your staff the very best. Thank you, mr. Chairman. This is my first year in congress. I serve the local government for over 24 years. And the most shocking thing about being in congress is that theres never been a comprehensive audit of the dod. Theres no other way of putting it. Its been said that if you cant measure it, you cant evaluate it. And i think this is one of the most significant issues face in the American People. Being able to adequately fund our military and our department of defense. I think if we dont get it together were going to lose the American Peoples trust in what were trying to do here. Theres no question as to how daunting this task is going to be. The stakes are high. Last Year Congress approved 700 billion from the department of defense and we owe it to the taxpayers to provide oversight and accountability over their tax dollars. In your written testimony, you mentioned that for years the department has received disclaimer of opinion on dodwide Financial Statements. Because it was not able to provide the evidence to support its financial information. And these disclaimers were based on management and not based on audit testing. Can you provide some clarification and e detail on this issue. What do you mean when you say it was based on management assertions it was conducted by independent public accountants. If you could shed some light on that, i u would greatly appreciate it. There are a number of parts of the department of defense that have been under audit for a number of years. When you dont have an opinion, management is not able to represent that everything is is in order. So they dont even begin the testing. Then you failed. This is one of the reasons why i have been. A strong advocate and supporter of the audit. When i was at the department of Homeland Security when i arrived there, they already had the audit the first year. Theres a limit to how much you can reform and fix that what was done was done correctly and effectively. I think thats the biggest transition were going to see from this year to Previous Years. Thank you. Once we see a department of defense audit for fiscal year 2018, how will dod track its process for correcting errors. Specifically how will the audit process be executed and what is the time line for analysis, execution and imlemtation of lessons learns from the audit. We have set is up a data set where every time theres a finding by the audit, notice of finding and recommendations and its made up of several conditions. The auditors will enter that into the database. Well have their view for every entity of each of the findings. They will have codes according to the type. Was it related to property. Well have an individual to correct it. This is important because it gets us past the habit of saying does the document have a clean opinion, no. And no one feeling they are accountable. Here aum these findings will be associated with an office or individual who will be responsible for the corrective action plan. I will be able to come back and report to you each year which of those were closed and which of those were not, who we should write to and say good job and who either needs more help or encouragement to get their piece of it done. Well be able to track it finding by finding and hold accountable over time. This is one of the tools that the audit gives us as we move from the higher level. Its hard to solve. One of the things i like about that is that that you may have a large number of findings. And this is yes. But you can fix those two. Thats all that you need to do. As more people do that, the whole organization moves in the right direction. Thank you. Id like to join with my colleagues in saying how much we look forward to your efforts and wish you good luck. Certainly long overdue. I want to take the opportunity to thank and applaud mr. Conway of being so doggedness with his hard work. I yield my time to mr. Conway. Thank you. Thank you for where you have gotten us to today. The thousands and thousands of man hours, people hours, however you want to refer to it that got you to however flawed we are at this point. Were far better off than when i first took up this task. I have seen that progress. Got a long way to go. Dont want to overpromise and underdeliver. The audit is unlikely to be clean opinion given the scope of what it has to be done. But we are so much further along based on the leadership that you and your team are providing and the hard work of the folks who get up and go to work to face this daunting problem that so please tell them thank you. Well try to keep that process moving forward and not do anything that hampers from a legislative standpoint because were frustrated it hasnt gotten done sooner. We have to recognize it is get. Ing done. You talked about findings. Thats got a certain definition to you. Explain to the committee what a finding really is, what that means from an auditors standpoint and why its important those get fixed. What the auditor does is they are holding the department accountable against standards. So the finding can consist of you are unable to produce the records to support this transaction. We looked at your property system and it indicated you should have 100 of these. When we walked the floor, there were 95. There are basically things that are wrong in the way that either we are accounting for assets orr recording. Those are items that are priorities for us. Those also include weaknesses and internal controls. You mentioned a circumstance where you had trillions of dollars of journal entries going back and forth. Thats a failure of internal control. The auditors are looking at your system. Those findings would include weaknesses or failures within the internal control system. Correct. You medical examinered a couple reasons why u it was important we do this in value along the way. Can you expand on the 39 helicopters or the 400 buildings and why not knowing. We obviously knew flying those knew they were there. Somewhere they disappeared from inventory and may not have been known they were there. At some point we have to address that nature. Can you talk to us about value added ahong this path that e we will get as a result of doing these audits. Absolutely. In order to get a clean opinion, theres a number of steps you have to solve. Even along the way, fixing the pieces along the way produce a tremendous benefit. If you think of the inventory in the wear house of how many spare parts you have which meant folks anticipating using them were waiting to take advantage of it. Or if you have the case of the buildings, the person on the base may know they are there, but somebody at headquarters trying to figure out do we have enough Square Footage is operating with incomplete information. So as the leadership mentioned at the beginning, accurate data helps drive more accurate Decision Making. Theres a couple other benefits. They were able to return 230 million to the services. It e lowered bills and allowed them to spend the money on operations and readiness because it had a more accurate understanding and management of finances. To be more aud mated reducing how much work they had to do for them. That saved them 65 million. So while we are focused on data accuracy, there are financial savings that come and there are other thicks that are a benefit for the men and women of the armed forces. The air force when they were doing a walkthrough discovered their enlistment records were being set up incorrectly as to whether they were 6 or 4year enlistment ls. They are updating manually hundreds of records every year as people have arrived because the entry was done incorrectly the a the beginning. They went back to do a system change to make sure that didnt happen. Reduced by 80 the man power accuracy issues. So it benefits the troops and the accuracy. Thank you. Thank you, mr. Chairman. I want to thank all the work done it over the past decades. And as a new person like us front people, im kind of after having read the information im kind of shocked. As a new person here to look at trillions of dollars and apparently no rush to get to the point where we have an audit, its disturbing. But i do want the to thank you for being here to discuss this critical issue for our war fighters and american taxpayers and thank you for your service. I wanted to echo my colleagues that proper oversight is long overdue at dod. Waste, fraud, abuse, have no place this any agency, especially not when it comes to guaranteeing our National Security and readiness. Every dollar wasted or fraudulently spent is a dollar lost to our fighters. They deserve better and i look forward to working with you and the rest of the committee to increase transparency and financial integrity. I also share concerns about what we can expect from this process. As you know the gao stated dod has not yet dm straited that its leadership has ability to achieve financial rgt reform. It lacksen financial managers with qualifications and level of expertise needed to lead reform throughout the department. Additionally, having looked at what occurred in the financial industry over time have concerns have how were going to go about gauaranteeing that this marriag between the dod and the different auditors is one thats going to be transparent enough for understas to understand tha taxpayers getting appropriate audits that we should be getting. As you e know, what occurred in the financial industry was that basically the auditors did what the people being audited wanted them to do, so that they can get the next contracts, the next time it was around. Or keep that prosecute. I really want to know how were going to watch that issue and has dod. Developed not only a process to guarantee were getting what we say were going to e get, but brought on additional percent them with deck straited Financial Management experience. What barriers continue to impact the ability to retract, retain and develop qualified personnel and retain is a very important issue when it comes to these types of things. And how will we verify the audits in the longterm. So let me cover a couple points. Ill start with the independence of the auditors. Thats a central one we had to address the very beginning. The auditors do not report to the army. Try report to the ig and makes decisions about what they do. So they have the same protected inb dependent of the ig. But its also a reason why we split the audit into lots of pieces. One is an auditor cannot audit an agency if they have c consulting work there. So finding an audit where no work anywhere in the department of defense would be somewhat limited. But if you break it, youll find firms that are. Youll find multiple ones you can have competition. So part of having the 24 or more separate audits is first, you get people who are independent. And second, we have sustained the kcompetition. If theres an auditor not performing, theres multiple with dod audit experience that they can go look to. We would never have they learned our business process be able to fund another auditor to compete. Just to that point, because my time is running short. I appreciate the ig and its independence shs but in long run, its been around for a long time. Whether its fraud or abuse or just lack of information. And it hasnt come to anybodys attention of how to correct that. So just the idea that the ig is going to be the independent evaluator of the process doesnt gauarantee the taxpayer that ths relationship is not going to be one that is controlled by those that know and can manipulate the system versus those that are responsible for making sure that we get what we are paying for. And its verifiable. So i would like to talk to you a little bit more in depth about where that goes. I yield back. So thank you. David is ab integral part of the Accounting Systems. Can you talk to the committee about have the audit and the corn fli conflict provided that if those were audited separately that service that was spried ed woul be really disruptive. How this team is looking at this issue. An audit would extend into. Another. So if you think of the army a, navy and air force have Financial Management processes that extend into the defense finance and accounting service. So the way that we address that is we have the acronym thats an audit of that Organization Support to the others that external auditors can rely on. Otherwise we would be paying tr the three or four auditors to show up. Rather than each coming in, well do a similar thing over ammunition storage and say, you can all rely on this audit piece so you dont have duplication of work. You talked about the accountability youre going to create with these findings out there. Can you talk to us about the accountability piece. You have two groups of folks that have been responsible for correcting or addressing the findings you have. You have civilian folks. Talk to us about the carrots available to you to hold people accountable within your system for getting those findings resolved to the satisfaction of the auditor. Theres a limit to them. We work with this committee but this was one of the things brought up before i was nominated to say how do you motivate people to stay focused on fixing thing when is you lack controls in the private sector. Theres a couple things. One is being able to clearly identify who is accountable. Its one of the first steps. Thats part of it. The succeed is is audit support who show up so theres no way around that comment being made about your contribution or your success. There are limits to how far we can go compared to a private sector. But. I think the transparency and accountability knowing one of the big. Est challenges is their responsibility. And so fixing that and being clear whose responsibility it is helps to drive that performance. There are limits that i recognize. That database is a big improvement from where we have been in the past. Sometimes the tasks just are so daunting that you can get away without addressing it. But having it broke b down to bitesize pieces will see progress over the coming future. These cpa firms that provide the audit are held to professional standards by their own entry and by the very state boards of accounts. So its not like you dont have those without oversight from professional standards that they would have to subscribe to. They are audited on whether or not they met those audit standards. They will have to produce to an acceptable standard. So were all humans. Theres been some failures in the past. There are professionals and professional standards that they are held to. Correct. The quick anecdote. Part of the issue has been over the time frame is making sure you have the tone from the top. I was encouraged by the experience i had in hawaii awhile back. Somewhere during that conversation, one of the petty officers asked me said congressman, how is the audit going. They are going throughout the food chain. If the issue of audit blt has gotten down to a petty officer in texas, we must be making some progress. With that, i yield back. Thank you. The efforts that are going on there its been a long standing problem. And we all know that. I wanted you to speak a little bit because i think we have addressed a few of the process issues, but particularly, the concerns around cultural resistance to change. And if you could, i think one of the things that were very aware of and any large bureaucracy that there are a lo the of issues and other people dont want the them to is a concern. Sexual harassment at the pentagon is a big concern. There are all these issues that go on in peoples workplaces and the cultural resistance to change is one that really has to be monitored closely. And how are you dealing with that . How are you expecting to be able to bring everybody to the table on these issues and get the kind of buy in thats necessary without individuals picking one another off. Its also that in order to fix the findings, we are taking systems and processes that were built to maximize support to one thing and requiring them to Pay Attention to the functions around them that they work with. And that can be a challenge because this is how it disrupts it. Theres a couple factors that go into this. The fist is the tone from the top. This is about accountability. This is what erg comes from. You are responsible for this. So its very clear running up your chain to say i dont want to do this. Its not going to run into success. The other one is the congress has been very clear. The other place you go is to tell them to make them stop. The likelihood of someone coming to congress and saying, please make them stop the audit and getting a warm and fuzzy hearing is pretty limited. In many cases, we have labor intensive processes that are data is trmped from one place to the other. It wasnt done right at the beginning. Or it was only filled in with the fields that the people needed. If you can explain that, we get that fixed and were going to spend less time doing this and hr time on the things you believe is your core mission. Yes, its a little bit of work. And when youre asked for records you dont have easy access to. Its a challenge. But over time, this will make your life easier. We have to work that office by office and organization by organization. But as you pointed out, this is as much changing peoples views about how to do things so they understand the importance. The third factor is the audit is annu annual. If you did this once and came back in ten years, i dont know you have the same incentive as the realization is they are coming back in six to nine months. So you can make the change and you can watch them find the same things again. So that third factor that what makes the Financial Statement is it repeats. They are just expecting you to change to provide an answer. Do you anticipate any need for Feedback System . So emp who is engaged in this can be getting their input all along the way. Some of that may be anonymous. We need the feedback. One of the things i have tried to draw attention to is because the audit is going to repeat, whats important is e we be able to sustain this. So if youre given a task where the resistance is way too labor intensive, stop. Lets figure out why answer request is labor intensive and fix the way we store the data or do the check so we can answer them efficiently every year. I would rather take the finding the fist year than do some expensive effort that im going to have to repeat the next year. If were not able to find the records, lets put the records where they can be searched. So next year its a quick process. We want to make this efficient over time and thats another way of reducing some of the resistance. The people have a way of saying i dont saying, hey, i dont understand why this is happening this way. The answer is maybe we can do it differently, but were still going to have to meet the standards of the audit. Speaking of the auditors, obviously youre going to be using a lot of different ways of responding to some of the concerns that have been existing for some time, is there anything in the training or preparation as you move forward that needs to be changed and that youre addressing as it relates to the way that people are approaching it . Theres been a lot of effort on that. My predecessor set up a relatively Robust Training Program for the Financial Management community that has been focused on introducing audits and audit redneadiness. Theres been some training, but those areas are equally affected. Thank you, mr. Chairman. Thank you, mr. Norquist. This is a very encouraging day, a day weve been waiting on a long time. We are facing so many threats about the world and we need more dollars to modernize and increase our readiness. At the same time, i hear back home concerns about waste. Any time there is waste, we need to make sure that it is rooted out and that were investing our precious defense dollars where they need to go. So you noted that one of the chief benefits of the audit process is improved accountability of the assets and resources. Are classified assets part of the audit process . Yes. Classified programs are included. Ill also tell you that all of the Defense Intelligence agencies have stand alone full scope audits. And most of them have been under audit for three years. Being a classified program does not exempt you from the scope of the audit. Will there be a separate addendum that we in congress will be able to access to look that the portion . Or how will there be accountability for the classified stand . For the stand alone audits, those are classified. As for the others, id rather talk to you in a closed forum. In your testimony you said something here that caught my attention. Of course, the cost is 367 million, which weve already talked about the longterm benefit of that investment in getting a handle on everything. But you go onto say you anticipate spending about 551 million this year in fiscal year 2018 fixing problems identified. Could you expound on what problems you anticipate and what the presumptions were to come up with that figure . Where do you get 551 for fixing problems . The number comes from talking to the services about what funding they have planned for this year and what did they have in the budget to address these reer requirements. The types of requirements are systems that have been already fielded that either theyre not storing or transmitting the data properly. Some of those changes are in there. Improvements in the way they inventory or store things. One of the steps involves the accuracy of the records. Those are the things that are driving those types of costs. Sounds like the Services Already have a handle on what they know are problems. Correct. And then they put a price tag do tha to that. Most of that is Computer Software . Its a piece of it. Its not most of it, but the systems are certainly a piece of it. Can you give more a specific breakdown on that . You anticipate youre going to have to purchase so many more Computer Systems that talk to each other, and you say record management. So are you putting man hours are you anticipating additional personnel to create written records . Im going to have to give you some of this for the record, but ill talk you through what i can at this level. When youre going through the audit, for many of them theyve either done some work in advance or the auditors have done preliminary work before the full scope audit. So they have some indication of the types of challenges they face and theyve developed correction action plans for those, including modifying one system to allow them to be audit compliant and allow them to turn off systems that are not. So theyre Financial Systems costs that improve the accuracy of the data and in the longterm may save us as we turn off the legacy systems. They may be changing the way they store the information or they store the assets to support the accountability depending on some of them switching to bar coding things that werent so they can have clear accountability of the status of each asset. Some of it is making sure thats centralized in a way they can respond in a way thats complete. Thats the types of at a high level the changes theyre doing. I would just say we need to watch this and dont let them get more money for something that simply should be their job, doing their job. Correct. Thank you. I yield back. Ms. Porter. Thank you. Im very excited about this. We have hoped for this for years. I wanted to ask you a couple of questions about it. I think it was 2007 maybe i was sitting here on this committee and we found out a lot of the weapons had been sent to iraq, were not traceable anymore. I remember the person saying, well, we didnt have enough auditors. I said something along the lines of, well, shouldnt we have auditors when were spending this kind of money. How did you decide on the numbers of auditors and what will you do if you discover that you need more . The number of auditors is our estimate based on what the contractors have proposed to do. Those contracts i believe allow for them to make adjustments over time. One of the things we want to do is make the best use of their time and their benefit to the taxpayer. Unlike some audits where as soon as they run into a problem, they get to stop and say theres a problem, im done. The i. G. Can say it would be useful to us if you dug deeper into the root cause behind it. That way we make sure were not just fixing the symptoms. My view is the auditor piece of this is like the reconnaissance its the guys who find you the issues, and thats a tremendous value to us. So if we need additional ones, im not hesitant to make sure we can get access to that. So they will not be constrained financially if you need that . It would have to be something in the way that the contract had been written, but we would realign funds if we needed to. I have a feeling its going to be deeper and longer than you think. My understand right now is youre talking about 870 million and thats just for 2018 . Thats for 2018. How is the cr going to be impacting that . The cr creates pressure on us funding wise. We are going to go ahead with the audit. What it does is many of the people that i need focused on audit remediation are focused on trying to split contracts. And many of the people that we need to have focusing on this are the funs who are also affected by the incremental nature of a cr. It creates pressure because were significantly below either what this Committee Recommended or the president and we have to make tradeoffs within that space. But we will still proceed with the audit. Then the other question i had is you talked about contractors having growing pains. And i think this article, you also said that we shouldnt be looking for like billions of savings. But its always been kind of one of those understandings that if we actually did monitor these contracts over time that the waste and fraud and delays does add up to billions. So how will they experience growing pains . And why dont you think that ultimately over a period of time we actually could save really significant numbers . Are you talking about saving numbers by auditing contractors . What will you be doing to make sure that contractors come in on time, we dont have cost delays . I know we have our work to do for the oversight, but i want to know how you think your role will play out. Let me break that into three parts. First is the piece of the Program Manager overseeing it. We support them with better quality data. The second, we have the Defense Contract Audit Agency that looks directly at billing. They recovered in 2016 i think 3. 6 billion by looking at billings that were coming in and questioning charges. That, we will continue to do. The second focused on the department and indirectly on the contractors, but its our payments to them. I think the place youre going to see the biggest reform opportunity over time is by allowing us to operate more like a business. You think of improvements in the accuracy and completeness of the financial system, being able to put in front of the cmo information closer to what their commercial counterpart would have allows them to make decisions. Youre a 600 billion enterprise. Better Decision Making can let you make better use of the dollars on a very large scale. I think youll see that type of advantage in driving reform in the estimation as were reforming the way we do something internally. There will be some cost avoidance when you have better security against intrusion. Im hoping well have more clarify when we have to make decisions. Yes. Thank you so much. I yield back. Many of us are familiar with the audit function in the private sector. In preparing for this, i came across an acronym called an ipa, which from my understanding is a really good type of beer. But i think you mean something different. These are major highly reputable firms. Ernst young, et cetera. There is a federal board that sets the auditing standards. They basically start with the commercial standards and then they add some modifications. For example, to defend the power of the purse of the u. S. Congress, we have bujd tedgetar rules that do not exist in the private sector. Things that matter to us in managing the money consistent with congress. So there are changes, all the other federal agencies follow them as well, but theres an accounting standards board that does that. Let me talk to you about continuing resolutions for a second. Recently the secretary of the navy has said publicly that since the budget control act was passed, the navy alone has lost or weve wasted 4 billion as a result of continuing residence laoti resolutions and budget unsernlt. I think the audit will show you some of the problems out of the disruption from the cr. Normally you have a year to spend money. One of the things that we tend not to like about federal agencies is that the fourth quarter, because of the way federal money works if you dont spend it, you lose it. Well, if the cr says wait, wait, wait, and then when youre down to a couple months left in the year, here, have it all, spend, spend, spend. And you may now be outside the window of when you negotiated an effective price. Your plans for contracting and so forth get depressed. The audit will help figure out how to manage it or what the consequences are. It would be helpful to us as the people that pass continuing resolutions to have that highlighted in your audit report so that we know that continuing resolutions have tangible negative results, not just to the operations but to the expenditure of money for the entire pentagon and each of the constituent services. During another part of my life, i was asked to take over the alabama twoyear College System at a time in which there were two criminal investigations going on. We used both the internal audit function and the external audit function not just to remedy what happened but to change the culture. Do you believe that there will be some change in the culture of the pentagon as a result of these audits . Absolutely. Thats the point. Good. Can you elaborate a little bit about how that would manifest itself . I think what youd find is there are folks who are doing their mission. One of their missions is to make sure information is updated for others to use. When their time is tight,gets s the others. Knowing thats going to be audited creates incentive to get those items done. It should reduce the amount of phone calls the person gets to answer the question because somebody can rely on the system now. That type of culture change is important in an organization that has such a spread of functions and has to rely on those type of data sets. This may be one of the most important things that we accomplish during our terms here in congress. So i think you will see a lot of support for your activities here on this committee and throughout the congress. Mr. Norquist, im very excited about the work that youre doing. Its a big task. Im trained as a cpa and an attorney and i was the mayor of a small city and county executive of a large county that didnt have proper procedures in place. I went through this on a much smaller scale. When i first came to congress, i would hear my colleagues asking about different Weapons Systems and pieces of equipment. And i didnt know what we owned and i tried to get my staff to figure out what we owned by working together with the d. O. D. And other people. It was very hard to get the limited information we got. 14,500 aircraft in the u. S. Military, for example. How many ships do we have, how many armored vehicles. We have will we have a comprehensive inventory at the end of this process . This is the important way of how we implement the audit. It is possible to have that without making it easily accessible. My concern is you miss some of the benefit of the audit. One of the changes is not only to have the accurate count but to have it easily searchable, in other words in a data set where somebody can run the report and say heres what you have, heres where they are and heres why theyre not working or working. So the idea is, well have the count. What we want to do is be more like a business, which is go beyond the mother standards of the audit to use that to drive intelligence so the leadership will have timely and Accurate Information not just about the dollars but about the facilities and equipment and military supplies. Each piece of equipment will be rated as far as its condition . The audit doesnt worry about small items, but the larger end ideas would certainly be things we should be able to have timely and accurate reporting on. What percentage of the overall audit is going to be devoted to inventor as opposed to procedure and process . They will do invenntory. Buildings and property. Also personnel. Over time that may be more labor intensive. Is it a half the task, a quarter of the task . Im guessing about a quarter. There will be a physical visiting of the sites to actually identify the pieces by the auditors, or will that be done by the people who work for the d. O. D. . By the auditors. Theyll do it two ways, book to floor and floor to book. Theyll look at your record and see what you have in inventory and look at the inventory to see thats what your records say. This is a very exciting task. Do you think that the audit of the inventory of equipment, of properties, of buildings, will be conducted by the end of the calendar year of 2018 or some time off into the future . They will go through the audit the spring and summer. They will publish their reports starting about november 15th. Theyll do this every year. Theyll do a sample. So they may pick certain pieces of equipment the first year and a different set the first year. But the findings they have on one are often the same for the others. Theyre only going to be a sample inventory of what we own . Its statistically sufficient to be able to have a level of confidence in it so they will be on site counting things and checking numbers. I dont know if it will tell you exactly what they counted but it will tell us the sample sizes, yes. Mr. Kelley. Thank you for being here. I again want to echo a thank you to chairman conaway for his efforts. Its a massive undertaking. Long overdue. Its going to be very, very difficult. I hope we improve on the processes Going Forward. Number one is oco. Theres a lot of room even when people are trying to do that right, for abuses that are intentional and unintentional. Im more concerned about the unintentional. How far back are you going to the start of the audit as far as those things . When you look at dollars in fy 18 they will be auditing money received in fiscal year. 18. When you look at assets acquired, they will look for existence and completeness of those assets. Just from having served quite a long time, i think some of the i understand the process of at the end of the year spend all the money or you lose it. That needs to be a recommendation so that you dont use it so we can spend that money wisely, maybe not in operations or maintenance, but in acquisitions its important to be able to carry that money forward as long as its earmarked or allocated to a source rather than rush to spend it on things you dont need. Im sure youll look at things like when we turn in equipment and those kind of things and also tool droppages, those things that you come back from a field exercise in the guard and you do all these tool droppages to make sure you get your equipment back. You will be looking at processes like that and Holding Accountable . It will hold people accountable. Did you properly dispose of it, did you record it . And well start to clearly see did you get paid for the disposal. The gao indicates that the d. O. D. Lacks a sufficient number of financial managers. What are you doing or what areas has the department done to acquire these . This is a challenge. When you have an organization that most of it has never been under audit and federal employees dont themselves conduct Financial Statement audits the way commercial enterprises do. You may have cpas that dont have exposure to those practices. The agencies that went under audit first like the corps of engineers hadnow have a number people who have been through an audit multiple times. Some of them weve grown by leading with certain examples. Some weve just done out and hired. The third focus is training. We have a robust Training System where weve been emphasizing audit readiness and internal controls, whereas a decade or two ago it would have been budget type topics and not accounting topics. Mr. Chairman, i have no more questions. Mr. Norquist, i want to interject on one point mr. Kelley raised. I am also very concerned that we are going to be so late in the fiscal year with a final appropriation and the needs are so great that theres going to be inevitable problems as a result. Im thinking about the audit. Youre going to find things and there may not be enough time to fix the things you find by the time the money is so i think my staff has reached out to yours to Work Together to see about some greater flexibility in spending money after the end of the fiscal year. I think about our maintenance problems. Theyre enormous. And we dont want to waste money but we also have got to get our ships and planes fixed. Absolutely. So i think this is an area and theres a lot of concern in congress about accountability for the money. I understand that, but i think this is an area where a number of us in Congress Working with you in the department can have a better especially this year, because we are going to be so late. So i just want to mention that because yall were discussing it even though its a little different from the topic here. Mr. Norquist thank you very much for being here, taking the time. But also thank you for helping us do our job and giving the people providing them with accountability to the american taxpayer. I appreciate that. Obviously you have a tremendous amount of experience in doing what youre doing, 28 years. You actually were the cfo that audited dhs. In the sixth months that youve been in this position, what has been the biggest lesson youve learned so far . And do you see foresee any other potential delays besides the worrying about budget stability and funding, as you mentioned in your last paragraph of your statement . Is there any other delays you foresee that will prevent you from doing your job . The thing that surprised me the most was how many people who have been working this issue were eager for it to finally start. I have to tell you for an accountant to be told to put together all those controls and all this stuff and then say were not doing the audit this year and even year they repeat that, you start to get to wondering if its ever going to happen. So this sense of its happening this year and everything youve done up until now matters, the reaction i would get was really re reenergizing. Everything you did to get read d y will matter and pay off. I think the biggest concern in the long run is going to be the systems, because they take the longest to fix. Policies, procedures, even cultural changes we can do more quickly, but some of the system interfaces may take some more time. One of the things id encourage the committee, when somebody comes in and asks for money for a business system, make sure you understand is it compliant, have they prioritized the things related to the audit, or have they sort of pushed those down on their todo list in place of something else. Theyre not sexy or glamorous, but making sure that the funding for those and the things that are being done, the systems phased out, those are the ones that will take us some time. But i think they have some tremendous longterm improvements for the department. Great. Once again, thank you and good luck. Thank you, sir. I yield back. Thank you mr. Chairman. I was in another committee where we had a marmup and i just got here now. From the 30,000 foot level, i really like that the audit will result in more accountability and more transparency, but other thing that i think will be accomplished is reform, uncovering where neighbor we dont have the best practices in place, where there might be waste or duplication. Can you reassure not just the members of this committee, but by extension the rest of our colleagues in congress and the american taxpayers that you think this audit will uncover where were not spending money in the best way possible so we can either lower the budget, accomplish the same thing, or invest in more lethal capability for the d. O. D. I think its very essential in this contribution to reform. Im very excited about the possibility and how its going to enforce reform. Deputy shanahan set up organizations within the department that are working through this issue. I support them by making sure they have the business data they need to make those reform decisions. As you look across organizations and youre comparing what do we pay in electrical rates across all of our different facilities, why. So instead of someone saying everyone cut your number by 10 , we focus on those places where the costs seem out of line with the rest of the enterprise. That type of data is what the a audit gives you and its an enabler to reform. Im more excited in the long runaboru run about what it allows the department to do to function like a business. Thank you. I know that chairman and my league on my left here and many others have really been pushing for greater effectiveness and efficiency in how the dollars are spent. We have that trust to the american taxpayer. So will the outcome be not just that we find hopefully these efficiencies, but its done in a way that the American People know that were finding these and the entire Congress Knows that were finding these efficiencie efficiencies. The Financial Statement is public. So what the auditors find and announce is closed, meaning what theyve fixed will be known. But i will also make a point of letting the committee know, heres how the reforms change things and heres the way that our business is run differently. For some they bill for their services, so we can look at the rates they charge. Thank you for that. I really appreciate it. The military of our country is held in the highest esteem by the American People. The only criticism that ill sometimes hear is are we spending the dollars the most effective way and people are concerned about that. So thank you so much for what youre doing. Mr. Chairman, i yield back. I wanted to specifically ask you about some of the issues that the outside auditors had that were brought in. Someone had asked a question a little bit earlier, but one of the reports that i read said they were having some challenges being able to make final conclusions. Can you talk about some of the questions that the outside auditors that were brought in had . Is there a particular one youre thinking about . Or just in general . Just in general. The first challenge an auditor faces in general, government and commercial, theyre required to be independent, which means the people showing up didnt used to work for you. So theyve got to understand your business processes. Weve put together guides that welcome them and say heres how were structured, heres what we do so they can start to recognize that they know what theyre testing for the adequacy of. Weve been doing security clearances to be able to do their work and get them through. A number of them are out doing site visits. The air force auditor is at Tinker Air Force base this week. The naval auditors visit jacksonville in the fall. Theres an orientation that they go through before they plan the audit to make sure their audit is consistent. Then theres security cleerarans weve been getting them through so they can start in a timely manner. This is a large audit for them, but theyve all scaled up for that challenge. What about training and sustaining a work force to be able to work specifically on Financial Management and what have you within d. O. D. . What are some challenges around that . I would think that just being able to have a fulltime staff work solely on this, because this is obviously a big issue, must be a challenge in and of itself. It is. Weve had to realign folks internally to be able to provide the time and attention on this to support them. These are some of the functions that over time when people took cuts, they said i can reduce this. Some of those functions are being restored. Were basically operating underneath the reduction accounts that the legislation put in place. But those are realigning forces within it. I will tell you that over time what i will likely come back to you with is shifting some of the work where we hired an outside firm as a consultant to something run by a federal employee, because were going to need those capabilities in house. Still, theres always a use for skilled experts on the outside on particular topics, but you want to change that dependency over time. I yield back. Mr. Conaway. Two things real quick. The department is constantly facing funding challenges, et cetera. Do you think youve got the right position or strength of position to be able to maintain and protect the funding to get all of this done . Do you think you have the right support from the secretary and others to be able to make a cogent argument . I have the support of the secretary and the deputy secretary at secretary. At the committee level, im very comfortable. If you Start Talking about a cr that runs through the year, that changes. We have readiness issues in others that id have to be paying attention to as well. On the database of findings, there will be some findings that are more important than others. Mmhm. So when it first comes out, just the scope of the number of findings will probably be startling. Will the cpa firms grade those findings as to ones that are, for lack of a better phrase, really critical or systemic versus easily fixed . Is there some sort of a gray there that will help bifurcate it to better understand the sheer number . They will score it and weight it in terms that relate to its size compared to the Financial Statement. Thats not necessarily its importance to the department in terms of fixing. They may decide theres a vulnerability that has really very little dollar value that we think is a security issue that makes it one of the first things we fix. We will have their scores in terms of how they categorize it. But well need to prioritize within the department which of these reforms are most important to get done. Some of the later ones, even if theyre large dollars, if we dont think thats data people are going to use right away, we may wait on some of those reforms to prioritize the others. It will come with a time frame thats rational and expected . Generally id expect the time frame to come from the corrective action plan. But some of these will take some period of time, but you can see the reduction in the conditions within it that will show you theyre making progress. Thank you. Thank you for your testimony and for the work that you are doing. I think its vitally important for the department and the taxpay taxpayer. This auditing function is something ive had a longstanding interest in. Years ago, we had somebody from d. O. D. And i asked the question, you know, what about auditing functions to make sure that were spending dollars wisely. It was then i became aware that we dont do tautdihe auditing function. So long overdue. While conducting an audit of this magnitude, i guess i want to know how you plan to deal with the significant complexities that it may present dealing with for example old contracts or contracts of systems not designed with an audit in mind or auditing in particular the classified portion of the budget. This is a particular area of interest that i would have. By design, theres not much transparency into black projects and programs for security reasons. How do you deal with those issues . And does guidance for new contracts provide for the eventual eventuality of an audit . The first one is contracts. There are some issues that we need the contractor to give us their invoices set up a certain way. Older contracts dont have that. So you look at which ones do you modify, which ones do you build on and are there some places where you do an alternate way of valuing that equipment. Theres different methodologies you can do. You try to decide whats the best use of taxpayer money. Some equipment f y, if you thin its going to go out of inventory, you dont spend a lot of energy on it. With regard to systems, i think you look at each and ask the question, can i fix it to do what we need it to do, can i replace it by moving its work to something else, or do i have to work around it . Each of those services, each of the organizations is going through that. Defense, dai is a name of an Accounting System that has been implemented across 20 defense wide organizations. In the services, theres a lot more of consolidating. Theyre going from several Accounting Systems down to fewer that are compliant and support an opinion. With regard to the classified, i may need to talk to you offline about how we handle it. Classified programs are included in the audit. We have cleared auditors and others who can do this. From the intelligence community, they all receive stand alone opinions, so they actually have been under audit for three years now. Ive been getting an update on how theyve been progressing. Those are published in a classified form and members of congress are entitled to look at those. Will those all be inhouse auditors for the classified programs and not outside contractors . Can i address all of those in a different format. At a certain point im going to run into classification concerns. Let me assure you theyre included and we can talk about the mechanics of it in a different way. Thank you very much for the work youre doing. I yield back. Thank you, mr. Chairman and mr. Norquist for being here. Its my understanding that several programs still have not received a clean audit opinion from the d. O. D. A. I. G. Can you talk about how you approach auditing these divisions of d. O. D. Over the course of fc 18 . There are some that have and then theres a series that havent. Some of those were under audit in this Previous Year in 17. The u. S. Marine corps went under audit this year for the first time. Some of them have a year of experience. The army, navy and air force are splitting their audits into two parts. They have a section funded by appropriations and another from a working capital fund. They each have different Accounting Systems. While the same auditor does both, theyve split it into two parts because the way they function is different. That split occurs in the army, navy and air force. Theyll all be rolled together by the i. G. To give an opinion on the department as a whole. Thank you, mr. Chairman. I yield back. Mr. Norquist, you referenced this earlier, but i want to ask again. In these efforts, do you have the support of the secretary of defense and the deputy secretary . What youve talked about is cultural change, it is prioritizing dollars. It involves a number of things that if theyre not supported by the top leadership, theyre not going to happen. Absolutely. The tone from the top is excellent. The first conversation i had with the secretary after he was nominated to be secretary, he brought this up on his own. So my experience with him is that he believes this is very important. Youve got to have that support from him to make this successful, i think. I just want to brag on the chairman for having the very first hearing of calendar 18 on this issue and highlight that. I appreciate your keen continued support for getting this done. That tone from the top is much appreciated. As i said at the beginning, this has been a bipartisan priority for years. Were going to stand there right with you to make sure that it actually occurs. Thank you, mr. Chairman. With that, the hearing is adjourned. [ inaudible conversations ] [ inaudible conversations ] well, yes, because as you know procurement all these forms of dollars have different time periods under which they can be spent. But im very conscious of the maintenance problems that we have talked about for the last two years. So weve got dire needs to fix our ships and planes and equipment. And i want to make sure we do that and we do it smartly. Arent you concerned about the training aspect of it . Of course. Youre exactly right. If you remember, the department has recorded to us that after three months of a cr, there is training that can never be recovered because those demands deep rolling and you can never catch up. I am concerned. Thats another use of the Operation Maintenance funding is the training as well as maintenance of equipment and so forth. Thats part of the reason i highlighted it. Its not exactly the topic of this hearing, but it is the topic of making good use of taxpayer dollars. How about the cost associated with this audit process, 367 million just to do the audit and then 551 million to make the fixes. Did you anticipate the costs . Do you see any issues with finding the money for it . I did not know how much it costs, but i thought he helped me understand better what were really talking about. If you have things that need to be fixed, they need to be fixed. Hiding your head in the sand is not a good answer. If you have business Accounting Systems that dont talk to each other thats part of what has gotten us into this problem that were in. Weve got to fix those things. Particularly at the beginning, it will be expensive. But i am firmly of the view that it will pay off for the taxpa r taxpayers and for the war fighters over time. The other point, somebody said if were trying the to do acquisition reform, youve got to have data. Youve got to know what youre doing in order to fix it. Last years ndaa, we really wanted to focus on what we contract for focuses, but we found out theres a lot of information we dont have. What we had to do last year is put in requirements for data and greater transparency. The audit helps all of that. When you talk about this end of the year thing, youre talking about a cr into spring. And all of a sudden theres a big boost and d. O. D. Has to spend this in a very short amount of time. Just as he said. Theyre operating under cr. All of a sudden youve got six months to spend the rest of the money. Im concerned that the needs are so great that i dont want that money not to be spent or to be spent foolishly. Is it possible you could go below that 700 . At this point youve done half the year on a cr at last years levels. The problems do not go away because we hit september 30th. The maintenance problems, the readiness, the training problems, other readiness problems are there and we need to fix them. Thats the priority. The men and women out there risking their lives for us deserve that. On the readiness issue, do you feel like youre making headway with your colleagues in that argument in terms of them understanding what that means . Yes, they are. But frankly whats really made headway with our colleagues is unfortunately the deaths of sailors, marines, soldiers, et cetera. None of us can ignore the accidents and unfortunately the casualties that have come from those accidents. The other thing thats made headway with my colleagues is the news of the day, the north Korean Missile launches and things that have happened in the world. So i think they have a better appreciation for the fact that we cant afford to wait and assume were going to fix things later. The world demands it now. Do you feel like d. O. D. Is focusing enough on that message right now . D. O. D. Is certainly focused on the problem. As weve talked before, some of the folks in d. O. D. Are reluctant to talk too openly about our shortfalls, because youre broadcasting that to your potential adversarieadversaries. And i admit its a fine balance. But if were going to convince my colleagues who are not on this committee as well as the American People to fix these things, i think we do have to at least talk somewhat openly about what our problems are. Either drafts of the Ballistic Missile review or Nuclear Posture review, whats your feeling on how those are shaping up . Well, i look forward to seeing them when theyre released soon. And im hopeful that maybe well have a hearing to go through those results and then well all be able to talk about it. You vice presidehavent seen . I dont talk about what ive seen. Thank you. Yall have a good day. Thank you. [ inaudible conversations ] weve got more live coverage coming up in just under an hour here on cspan3. At 12 40 eastern we take you live to a conversation on policing and criminal justice in america. Also coming up this afternoon, President Trump has a News Conference with the Prime Minister of norway scheduled for 3 20 eastern. Cspan3 will bring you live coverage when that starts. And then this evening well take you to Richmond Virginia for Governor Terry mcoff lives state mcauliffes state of the commonwealth address. Cspan, where history unfolds daily. In 1979 cspan was created as a Public Service by americas Cable Television companies and is brought to you today by your cable provider. At 12 40 eastern we plan to take you live to a conversation about criminal justice reform. While we wait for that to get underway, heres a look at President Trumps meeting yesterday with lawmakers on immigration and border security. Thank you very much, everyone, for being here