,,ii #aacth ,,congress #ast ,session ,s4 #aeaj ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #ag1 #bjac,mr4 ,coburn 7for himself1 ,mr4 ,manchin1 ,mr4 ,grassley1 ,mr4 ,johnson of ,wisconsin1 ,mr4 ,paul1 ,ms4 ,ayotte1 ,mr4 ,cornyn1 ,mr4 ,chambliss1 ,mr4 ,heller1 ,mrs4 ,mc,caskill1 and ,mr4 ,wyden7 introduced the following bill2 which was read twice and referred to the ,committee on ,armed ,services ,a ,,bill ,to provide for auditable financial statements for the ,department of ,defense1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,audit the ,pentagon ,act of #bjac4 #b4 ,findings ,congress makes the following findings3 7#a7 ,section #i of ,article ,i of the ,constitution of the ,united ,states requires all agencies of the ,federal ,government1 including the ,department of ,defense1 to publish a regular statement and account of the receipts and expenditures of all public money4 7#b7 ,section #ceae of title #ca1 ,united ,states ,code1 requires the agencies of the ,federal ,government1 including the ,department of ,defense1 to present auditable financial statements beginning not later than ,march #a1 #aiig4 ,the ,department has not complied with this law4 7#c7 ,the ,federal ,financial ,management ,improvement ,act of #aiif 7#ca ,u4,s4,c4 #ceab note7 requires financial systems acquired by the ,federal ,government1 including the ,department of ,defense1 to be able to provide information to leaders to manage and control the cost of ,government4 ,the ,department has not complied with this law4 7#d7 ,the financial management of the ,department of ,defense has been on the ,high-,risk list of the ,government ,accountability ,office1 which means that the ,department is not consistently able to control costs2 ensure basic accountability2 anticipate future costs and claims on the budget2 measure performance2 maintain funds control2 and prevent and detect fraud1 waste1 and abuse4 7#e7 ,the ,national ,defense ,authorization ,act for ,fiscal ,year #bjjb 7,public ,law #ajg-ajg7 requires the ,secretary of ,defense to report to ,congress annually on the reliability of the financial statements of the ,department of ,defense1 to minimize resources spent on producing unreliable financial statements1 and to use resources saved to improve financial management policies1 procedures1 and internal controls4 7#f7 ,in #bjje1 the ,department of ,defense created a ,financial ,improvement and ,audit ,readiness 7,,fiar7 ,plan1 overseen by a directorate within the office of the ,under ,secretary of ,defense 7,comptroller71 to improve ,department business processes with the goal of producing timely1 reliable1 and accurate financial information that could generate an audit-ready annual financial statement4 ,in ,december #bjje1 that directorate1 known as the ,,fiar ,directorate1 issued the first of a series of semiannual reports on the status of the ,financial ,improvement and ,audit ,readiness ,plan4 7#g7 ,the ,national ,defense ,authorization ,act for ,fiscal ,year #bjaj 7,public ,law #aaa-hd7 requires regular status reports on the ,financial ,improvement and ,audit ,readiness ,plan described in paragraph 7#f71 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 #cj1 #bjag4 ,in addition1 the ,national ,defense ,authorization ,act for ,fiscal ,year #bjac 7,public ,law #aab-bci7 requires that the statement of budgetary resources of the ,department of ,defense be validated as ready for audit by not later than ,september #cj1 #bjad4 7#h7 ,at a ,september #bjaj hearing of the ,senate1 the ,government ,accountability ,office stated that past expenditures by the ,department of ,defense of #e1hjj1jjj1jjj to improve financial information1 and billions of dollars more of anticipated expenditures on new information technology systems for that purpose1 may not suffice to achieve full audit readiness of the financial statement of the ,department4 ,at that hearing1 the ,government ,accountability ,office could not predict when the ,department would achieve full audit readiness of such statements4 7#i7 ,at a #bjac hearing of the ,senate1 ,secretary of ,defense ,chuck ,hagel affirmed his commitment to audit-ready budget statements for the ,department of ,defense by the end of #bjad1 and stated that he will do everything he can to fulfill this commitment4 ,at that hearing1 ,secretary ,hagel noted that auditable financial statements were essential to the ,department not only for improving the quality of its financial information1 but also for reassuring the public and ,congress that it is a good steward of public funds4 #c4 ,cessation of applicability of reporting requirements regarding the financial statements of the ,department of ,defense 7a7 ,cessation of applicability 7#a7 ,military departments ,the financial statements of a military department shall cease to be covered by the reporting requirements specified in subsection 7b7 upon the issuance of an unqualified audit opinion on such financial statements4 7#b7 ,department of ,defense ,the reporting requirements specified in subsection 7b7 shall cease to be effective when an unqualified audit opinion is issued on the financial statements of the ,department of ,defense1 including each of the military departments and the other reporting entities defined by the ,office of ,management and ,budget4 7b7 ,reporting requirements ,the reporting requirements specified in this subsection are the following3 7#a7 ,the requirement for annual reports in section #hib7;b7 of the ,ike ,skelton ,national ,defense ,authorization ,act for ,fiscal ,year #bjaa 7,public ,law #aaa-chc2 #abd ,stat4 #dcaa2 #aj ,u4,s4,c4 #bcjf;a note74 7#b7 ,the requirement for semi-annual reports in section #ajjc7;b7 of the ,national ,defense ,authorization ,act for ,fiscal ,year #bjaj 7,public ,law #aaa-hd2 #abc ,stat4 #bddj2 #aj ,u4,s4,c4 #bbbb note74 7#c7 ,the requirement for annual reports in section #hag7;d7 of the ,bob ,stump ,national ,defense ,authorization ,act for ,fiscal ,year #bjjc 7#aj ,u4,s4,c4 #bcjf;a note74 7#d7 ,the requirement for annual reports in section #ajjh7;a7 of the ,national ,defense ,authorization ,act for ,fiscal ,year #bjjb 7,public ,law #ajg-ajg2 #aae ,stat4 #abjd2 #aj ,u4,s4,c4 #aac note74 7#e7 ,the requirement for periodic reports in section #ijh7;b7 of the ,defense ,acquisition ,improvement ,act of #aihf 7,public ,law #ii-ejj2 #ajj ,stat4 #aghc-adj2 #aj ,u4,s4,c4 #bcbf note7 and duplicate requirements as provided for in section #f of the ,defense ,technical ,corrections ,act of #aihg 7,public ,law #ajj-bf2 #aja ,stat4 #bgd2 #aj ,u4,s4,c4 #bcjb note74 #d4 ,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 #bjad 7a7 ,department of ,defense generally ,subject to section #f7a71 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 #bjad1 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 #h1jjj1jjj1jjj4 7b7 ,military departments1 ,defense ,agencies1 and defense field activities ,subject to section #g7;a71 if a military department1 ,defense ,agency1 or defense field activity obtains an audit with an unqualified opinion on its statement of budgetary resources for any fiscal year after fiscal year #bjad1 the thresholds for reprogramming of funds of such military department1 ,defense ,agency1 or defense field activity1 as the case may be1 without prior notice to ,congress for the succeeding fiscal year shall be deemed to be the thresholds as follows3 7#a7 ,in the case of an increase or decrease to the program base amount for a procurement program1 #fj1jjj1jjj4 7#b7 ,in the case of an increase or decrease to the program base amount for a research program1 #cj1jjj1jjj4 7#c7 ,in the case of an increase or decrease to the amount for a budget activity for operation and maintenance1 #de1jjj1jjj4 7#d7 ,in the case of an increase or decrease to the amount for a budget activity for military personnel1 #cj1jjj1jjj4 7c7 ,construction ,nothing in this section shall be construed to alter or revise any requirement 7other than a threshold amount7 for notice to ,congress on transfers covered by subsection 7a7 or reprogrammings covered by subsection 7b7 under any other provision of law4 7d7 ,definitions ,in this section1 the terms program base amount1 procurement program1 research program1 and budget activity have the meanings given such terms in chapter #f of volume #c of the ,financial ,management ,regulation of the ,department of ,defense 7,do,d #gjjj4ad,r71 dated ,march #bjaa1 or any successor document4 #e4 ,failure to obtain audits with unqualified opinion of fiscal year #bjae general fund statement of budgetary resources of the ,department of ,defense 7a7 ,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 #bjae by ,december #ca1 #bjae1 the following shall take effect on ,january #a1 #bjaf3 7#a7 ,additional qualifications and duties of ,,usd 7,comptroller7 7,a7 ,qualifications ,any individual nominated for appointment to the position of ,under ,secretary of ,defense 7,comptroller7 under section #ace of title #aj1 ,united ,states ,code1 shall be an individual who has served-- 7i7 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 service2 or 7ii7 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 service4 7,b7 ,duties and powers ,the duties and powers of the individual serving as ,under ,secretary of ,defense 7,comptroller7 shall include1 in addition to the duties and powers specified in section #ace7;c7 of title #aj1 ,united ,states ,code1 such duties and powers with respect to the financial management of the ,department of ,defense as the ,deputy ,secretary of ,defense 7acting in the capacity of ,chief ,management ,officer of the ,department of ,defense7 or a successor official in the ,department of ,defense 7acting in such capacity7 may prescribe4 7#b7 ,additional qualifications and responsibilities of ,,asa for ,financial ,management 7,a7 ,qualifications ,any individual nominated for appointment to the position of ,assistant ,secretary of the ,army for ,financial ,management under section #cjaf of title #aj1 ,united ,states ,code1 shall be an individual who has served-- 7i7 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 service2 or 7ii7 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 service4 7,b7 ,responsibilities ,the responsibilities of the individual serving as ,assistant ,secretary of the ,army for ,financial ,management shall include1 in addition to the responsibilities specified in section #cjaf7;b77#d7 of title #aj1 ,united ,states ,code1 such responsibilities as the ,deputy ,secretary of ,defense 7acting in the capacity of ,chief ,management ,officer of the ,department of ,defense7 or a successor official in the ,department of ,defense 7acting in such capacity7 may prescribe4 7#c7 ,additional qualifications and responsibilities of ,,asn for ,financial ,management 7,a7 ,qualifications ,any individual nominated for appointment to the position of ,assistant ,secretary of the ,navy for ,financial ,management under section #ejaf of title #aj1 ,united ,states ,code1 shall be an individual who has served-- 7i7 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 service2 or 7ii7 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 service4 7,b7 ,responsibilities ,the responsibilities of the individual serving as ,assistant ,secretary of the ,navy for ,financial ,management shall include1 in addition to the responsibilities specified in section #ejaf7;b77#d7 of title #aj1 ,united ,states ,code1 such responsibilities as the ,deputy ,secretary of ,defense 7acting in the capacity of ,chief ,management ,officer of the ,department of ,defense7 or a successor official in the ,department of ,defense 7acting in such capacity7 may prescribe4 7#d7 ,additional qualifications and responsibilities of ,,asaf for ,financial ,management 7,a7 ,qualifications ,any individual nominated for appointment to the position of ,assistant ,secretary of the ,air ,force for ,financial ,management under section #hjaf of title #aj1 ,united ,states ,code1 shall be an individual who has served-- 7i7 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 service2 or 7ii7 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 service4 7,b7 ,responsibilities ,the responsibilities of the individual serving as ,assistant ,secretary of the ,air ,force for ,financial ,management shall include1 in addition to the responsibilities specified in section #hjaf7;b77#d7 of title #aj1 ,united ,states ,code1 such responsibilities as the ,deputy ,secretary of ,defense 7acting in the capacity of ,chief ,management ,officer of the ,department of ,defense7 or a successor official in the ,department of ,defense 7acting in such capacity7 may prescribe4 7b7 ,public company defined ,in this section1 the term public company has the meaning given the term issuer in section #b7;a77#g7 of the ,sarbanes-,oxley ,act of #bjjb 7#ae ,u4,s4,c4 #gbja7;a77#g774 #f4 ,failure of the ,department of ,defense to obtain audits with unqualified opinion of fiscal year #bjah 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 #bjah by ,december #ca1 #bjah3 7#a7 ,permanent cessation of enhanced general transfer authority ,effective as of ,january #a1 #bjai1 the authority in section #d7;a7 shall cease to be available to the ,department of ,defense for fiscal year #bjah and any fiscal year thereafter4 7#b7 ,reorganization of responsibilities of chief management officer ,effective as of ,april #a1 #bjai3 7,a7 ,position of ,chief ,management ,officer ,section #acb;a of title #aj1 ,united ,states ,code1 is amended to read as follows3 #acb;a4 ,chief ,management ,officer 7a7 ,in general 7#a7 ,there is a ,chief ,management ,officer of the ,department of ,defense1 appointed from civilian life by the ,president1 by and with the advice and consent of the ,senate4 7#b7 ,any individual nominated for appointment as ,chief ,management ,officer shall be an individual who has-- 7,a7 extensive executive level leadership and management experience in the public or private sector2 7,b7 strong leadership skills2 7,c7 a demonstrated ability to manage large and complex organizations2 and 7,d7 a proven record in achieving positive operational results4 7b7 ,powers and duties ,the ,chief ,management ,officer shall perform such duties and exercise such powers as the ,secretary of ,defense may prescribe4 7c7 ,service as ,chief ,management ,officer 7#a7 ,the ,chief ,management ,officer is the ,chief ,management ,officer of the ,department of ,defense4 7#b7 ,in serving as the ,chief ,management ,officer of the ,department of ,defense1 the ,chief ,management ,officer shall be responsible for the management and administration of the ,department of ,defense with respect to the following3 7,a7 ,the expenditure of funds1 accounting1 and finance4 7,b7 ,procurement1 including procurement of any enterprise resource planning 7,,erp7 system and any information technology 7,,it7 system that is a financial feeder system1 human resources system1 or logistics system4 7,c7 ,facilities1 property1 nonmilitary equipment1 and other resources4 7,d7 ,strategic planning1 annual performance planning1 and identification and tracking of performance measures4 7,e7 ,internal audits and management analyses of the programs and activities of the ,department1 including the ,defense ,contract ,audit ,agency4 7,f7 ,such other areas or matters as the ,secretary of ,defense may designate4 7#c7 ,the head of the ,defense ,contract ,audit ,agency shall be under the supervision of1 and shall report directly to1 the ,chief ,management ,officer4 7d7 ,precedence ,the ,chief ,management ,officer takes precedence in the ,department of ,defense after the ,secretary of ,defense and the ,deputy ,secretary of ,defense4 4 7,b7 ,conforming amendments 7i7 ,section #aca7;b7 of title #aj1 ,united ,states ,code1 is amended-- 7,i7 by striking paragraph 7#c72 7,,ii7 by redesignating paragraph 7#b7 as paragraph 7#c72 and 7,,iii7 by inserting after paragraph 7#a7 the following new paragraph 7#b73 7#b7 ,the ,chief ,management ,officer of the ,department of ,defense4 4 7ii7 ,section #acb of such title is amended-- 7,i7 by striking subsection 7c72 and 7,,ii7 by redesignating subsections 7d7 and 7e7 as subsections 7c7 and 7d71 respectively4 7iii7 ,section #acc7;e77#a7 of such title is amended by striking and the ,deputy ,secretary of ,defense and inserting 1 the ,deputy ,secretary of ,defense1 and the ,chief ,management ,officer of the ,department of ,defense4 7iv7 ,such title is further amended by inserting the ,chief ,management ,officer of the ,department of ,defense1 after the ,deputy ,secretary of ,defense1 each place it appears in the provisions as follows3 7,i7 ,section #acc7;e77#b74 7,,ii7 ,section #acd7;c74 7v7 ,section #acg;a7d7 of such title is amended by striking the ,secretaries of the military departments1 and all that follows and inserting the ,chief ,management ,officer of the ,department of ,defense1 the ,secretaries of the military departments1 and the ,under ,secretaries of ,defense44 7vi7 ,section #ach7;d7 of such title is amended by striking the ,secretaries of the military departments1 and all that follows through the period and inserting the ,chief ,management ,officer of the ,department of ,defense1 the ,secretaries of the military departments1 the ,under ,secretaries of ,defense1 and the ,director of ,defense ,research and ,engineering44 7,c7 ,clerical amendment ,the table of sections at the beginning of chapter #d of such title is amended by striking the item relating to section #acb;a and inserting the following new item3 #acb;a4 ,chief ,management ,officer4 4 7,d7 ,executive schedule ,section #ecac of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 ,chief ,management ,officer of the ,department of ,defense4 4 7,e7 ,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 #acb;a of title #aj1 ,united ,states ,code 7as amended by this paragraph74 7#c7 ,jurisdiction of ,,dfas ,effective as of ,april #a1 #bjai3 7,a7 ,transfer to ,department of the ,treasury ,jurisdiction of the ,defense ,finance and ,accounting ,service 7,,dfas7 is transferred from the ,department of ,defense to the ,department of the ,treasury4 7,b7 ,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 ,treasury4 7,c7 ,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 paragraph4 ,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 ,treasury4 7,d7 ,construction ,nothing in this paragraph shall be construed as terminating1 altering1 or revising any responsibilities or authorities of the ,defense ,finance and ,accounting ,service 7other than responsibilities and authorities in connection with the exercise of jurisdiction of the ,service following transfer under this paragraph74 #g4 ,failure of the military departments to obtain audits with unqualified opinion of financial statements for fiscal years after fiscal year #bjag 7a7 ,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 #bjah by ,december #ca1 #bjah1 effective as of ,january #a1 #bjai1 the authorities in section #d7;b7 shall cease to be available to the military department for fiscal year #bjah and any fiscal year thereafter4 7b7 ,annual prohibition on expenditure of funds for certain ,m,d,a,ps past ,milestone ,b in connection with failure 7#a7 ,prohibition ,effective for fiscal years after fiscal year #bjag1 if a military department fails to obtain an audit with an unqualified opinion on its financial statements for any fiscal year1 effective as of the date of the issuance of the opinion on such audit1 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 audit4 7#b7 ,definitions ,in this subsection3 7,a7 ,the term major defense acquisition program has the meaning given that term in section #bdcj of title #aj1 ,united ,states ,code4 7,b7 ,the term ,milestone ,b approval has the meaning given that term in section #bcff7;e77#g7 of title #aj1 ,united ,states ,code4 #h4 ,enterprise resource planning ,the ,secretary of ,defense shall amend the acquisition guidance of the ,department of ,defense to provide for the following3 7#a7 ,the ,defense ,business ,system ,management ,committee may not approve procurement of any ,enterprise ,resource ,planning 7,,erp7 business system that is independently estimated to take longer than three years to procure from initial obligation of funds to full deployment and sustainment4 7#b7 ,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 sustainment4 7#c7 ,any implementation of an ,enterprise ,resource ,planning system shall comply with each of the following3 7,a7 ,the current ,business ,enterprise ,architecture established by the ,chief ,management ,officer of the ,department of ,defense4 7,b7 ,the provisions of section #bbbb of title #aj1 ,united ,states ,code4 7#d7 ,the ,deputy ,secretary of ,defense 7acting in the capacity of ,chief ,management ,officer of the ,department of ,defense7 or a successor official in the ,department of ,defense 7acting in such capacity7 shall have the authority to replace any program manager 7whether in a military department or a ,defense ,agency7 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 sustainment4 7#e7 ,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 7whether with the ,department of ,defense or another department or agency of the ,federal ,government71 including meeting cost and schedule goals4