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tv   Pentagon Audit and Business Operations  CSPAN  March 10, 2018 2:00am-3:47am EST

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vaulted to the committee hearing on the ongoing department of defense audit and pentagon business obligations reform the nation faces grave threats abroad while facing situations at home even the dual pressures rebuilding the military and reforming the way the pentagon does business must go hand-in-hand.
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as the defense secretary said the heart of the competitive edge is reforming the department and gaining full value from every taxpayer dollar. so i commend the secretary for launching the effort and after almost 30 years the pentagon has finally begun its consolidated audit. i would reemphasize the pentagon began. the bad news is that we all followed the recently publicized defensdefense logistics agency s finding that nearly $1 billion of inaccuracies. as the department continues, there will be more painful findings, but there shouldn't be too are the efforts, that is the purpose of the audit to find things that need to be corrected and to save money by conducting them. we know a successful audit will take time and require sustained
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congressional oversight to the accountability and the department. checking the box by completing the audit is not enough. the goal must be improved financial management and business operations and the will and power managers to make better decisions with more accurate financial reporting systems and data. for the troops it will be better decision-making that will be more money for critical equipment and training. for our part, congress needs to step up the oversight of the consolidated audit and support findings that we need the department of health to understand the process. many of my colleagues on the committee share my view and several of them also serve on the budget committee and members of this committee knows the cost matters, too. the defense department audit will cost almost a billion dollars this fiscal year alone. i did ask some questions and i want to thank the department in
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particularly mr. norquist for the speedy response. we are not used to that but appreciate it and i was interested even in the cost of the audit and noticed in the explanation that of the $918 million are being spent, 368 million are for the remediation, so that is for solving the problems that are in it and there's also 135 million for the financial system fixes and another 48 million for internal control which is all important, so actually in my opinion the audit this $367 million. the rest is the benefits that we get out of it by giving the fixes that are necessary. but that is why congress needed a full breakdown of the projected cost of the department should also provide an
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explanation of how it is ensuring the independence of its contracted auditors and we need to know how the department plans to remedy any problems they find. any insight and into which problems the pentagon is fixing will motivate congress to continue supporting the audit. there may also be instances for additional funding u up front to avoid increased cost later on and we need to plan accordingly. ultimately, reforming the pentagon requires more than an audit. defense spending is now higher than at the height of ronald reagan's presidency that we are not seeing the same value for each defense dollars than today. an effective business processes mediated reason. the pentagon will never operate a business, but it' but it stilt reform its business operations. the department's management culture which has taken over the course of several decades frustrates everyone including its employees and many of the senior leaders.
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notably, the department has yet to implement a modern workforce management system and i share my colleague senator john mccain and his concern over the proposed ability to tell us how many contractors work there. even more troubling the department doesn't possess adequate reporting systems to measure the impact of ongoing reforms from workforce changes to the adoption of shared services and cloud-based ip systems. i am pleased however that the deputy secretary of defense has built a reform management group that oversees the development of such issues. mr. gibson is the first chief management officer and will have the unique opportunity to lead in this area. it is my hope that we can build a mutually beneficial working relationship to help you achieve your goal. managing the pentagon is a difficult task but it is crucial to the nation's defense and ensuring that we spend america's tax dollars wisely.
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mr. gibson and mr. norquist, thank you for joining us today and for your service. i look forward to continuing the discussion. >> thank you very much mr. chairman and the guests for being with us. the chair man and i don't agree on a lot of issues, but i think on this one we probably do. the department of defense receives far more money i than from the taxpayers and any other governmental agency. now as a nation we spend about, we spend more money the next ten or 12 nations of the world combined and the congress against my throat decided to add another 165 billion to the pentagon over the next two years and yet alone among all agencies of the government, the pentagon has not been able to perform an
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agencywide audit. interestingly mr. chairman you may recall the day before nine elevenths in 2001, the secretary defense donald rumsfeld remarked of defense donald rumsfeld remarked that the pentagon could not account for some $2.3 trillion of transactions. needless to say his remarks did get a lot of attention given what happened the following day that i was back in 2001. rumsfeld talking about $2.3 trillion of transactions that couldn't be properly accounted for. and we have seen some recent audits that tell us interesting things. the commission on wartime contracting convoluted and 2011 but the $60 billion spent had
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been lost to fraud and waste. similarly in 2015 the special inspector general for afghanistan reconstruction reported that the pentagon couldn't account for $45 billion in funding for reconstruction projects, and more recently an audit conducted by ernst & young with the defense logistics agency found that it couldn't account for some $800 million of construction projects. i want to thank the chairman and secretary last month when you said and i quote taxpayers must trust anhave trust and confident their hard-earned dollars are being spent wisely. if such canno such could not bef justified it will be difficult to achieve real growth in the defensdefense spending that youe identified as necessary to meet mission requirements." and i agree that it is essential that the pentagon demonstrates the news as trustworthy and accountable.
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that is why i was disappointed to read the pentagon. a defense business board report from 2015 which recommended ways to eliminate some $125 billion of bureaucratic waste. i don't think that there is anybody here that he would want to be able to defend the country to make sure that the men and women of the armed forces have over thall of the equipment thay need to protect our lives but i would hope nobody here believes that just because this is the department of defense we will defend an enormous amount of bureaucratic waste. one half i think the chair man touched on one half of the pentagon's budget goes directly to the hands of contractors. and of that amount, one third, at $100 million boost to the top five defense contractors in the united states, all of which way they have been convicted or
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settled lawsuits related to fraud or misconduct against the federal government, so we are dealindoing with the defense contractors who've been involved in fraud against the federal government and also i have to run out but i will come back i would like to get a response from the guests today about the fact that the ceos of the top five defense contractors in the united states made in a cumulative $96 million in compensation. five ceos whose agencies are significantly funded by the federal government, of those defense companies made $96 million in compensation. back in 2011 i requested a report from the pentagon that detailed how the department paid 573 billion over ten years to
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more than 300 contractors involved in the cases against the federal government. there are a lot of issues here. the size of the pentagon and the complexity of the budget is enormous and nobody thinks that it will solve the problem immediately but your job is to tell the american people how our tax dollars are being spent, to tell us in fact where the money is going. i don't know that we know where the money is going, to tell us why it is that we continue to do business with the defense contractors who give cost overruns. are we negotiating effectively or are the defense contractors simply coming in saying we will do it for this much and nobody particularly cares, s so there's an enormous amount of work and i look forward to the question period but at this moment i have to run out. thank you very much for being
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here. >> thank you senator. i will now introduce to the witnesses. both witness first this morning is david norquist, the department of defense comptroller and chief financial officer. under secretary norquist has been in office since may of 2017 and he departments efforts on budget matters. he spent his career in budget related national security positions including leading the budget audit process at the dhs and the george w. bush administration. the second witness this morning is mr. john gibson, the department of defense chief management officer who was reconfirmed as the chief management officer only weeks ago after serving as the deputy chief manager since last november. prior to the surface of the department of defense, he led several aerospace companies and previously served in a management reform position of thatthe pentagon during the geoe
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w. bush administration for information each witness will take up to five minutes to complicate his opening remarks all of which will be a part of the record followed by questions. we look forward to receiving your testimony. mr. norquist, you may begin first. >> ranking members of the committee, thank you for the opportunity to provide an overview of the audit progress and plans. before i begin i would like to take a moment to thank you and the rest of the congress with bipartisan budget agreement of 2018, the agreement raised the caps of fiscal year 2018 and 199 of the defense spending to a level that will support the national defense strategy and allow us to restore and rebuild our military. the agreement is a two-year deals with only the congress to support again for the sequestration when we return in
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fiscal year 2020. when the secretary released the national defense strategy committee described three distinct lines of effort, building a more lethal, resilient, agile and ready joint force from strengthening alliances as we attract new partners in reforming the defense business practices for the greater performance and accountability. the third line relates directly to the audit. it's an important component in the improvement of the business operations. we anticipate the audit findings in many areas. that is why we are doing these audits to find the problems and fix the root causes. i appreciate your interest in the art of the department of defense. it is a long-term meaningful and necessary undertaking that encompasses the whole of the department and its success depends on sustained congressional support. the personal interest of the chair man and others on this committee have shown in this issue are a part of the reason the od has a long last begun the audit did although they are not new to the department of
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defense, this is the first time that the department has undergone a full financial statement audits. the financial statement audit is comprehensive. it occurs annually, and it covers more than financial management. financial statement audits include town, location and condition of the military equipment, property and oriented testing security abilities in the business system and the system complies with accounting standards and validate the accuracy of the personal records and actions such as promotions and separation. the department anticipates having approximately 1,200 financial statement auditors assessing whether the books and records present a true and accurate picture of the financial conditions and results of the operations in accordance with accounting standards. based on my experience of the department of homeland security, it will take time to implement the changes necessary to pass the audit. it took the homeland security relativelhomeland securityrelatr
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enterprise about ten years to get its first opinion. however we won't have to wait for the opinion for the benefits from the audit. the financial statement audit of strife enterprise improvements to standardize business processes and improve the quality of the data. it does the accountability to the american people, transparency, accountability and business process reform are some of the benefits of the financial statement audit. regarding transparency requires the financial statements and underlining data available to the public including the reliable picture of the assets, liabilities and spending. it will highlight areas we need to improve over the assets and resources by fixing property records we can demonstrate full accountability of the assets. the better data results in the audit remediation and the use of modern data analytics directly supporting the efforts to bring business reform to its operations. all this is an enabler that will
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drive more opportunities for reform. the consolidated audit is likely to be the largest audit ever undertaken and comprises more than 24 standalone audits in an overarching consolidated audit. auditors will select line items on financial statements based on the materiality and risk and will ask for the listing of items were transactions that make up the total amount on the financial statement. to put the scope of the task in perspective, the army has over 15 billion transactions that the auditors will select from. the auditors will then pick samples from the testing that include physically verifying that property exists and is accurately recorded. only once the auditors improve the testing they will evaluate the results and put forth any problems they find and reevaluate the status of the corrective actions each year. going forward we will measure progress toward a positive opinion on the audit using the
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number of the findings resolved. in closing i want to thank the committee for its interest and focus on the department of defense. i anticipate the process will encumber many problems, some of which will be difficult to fix. the alternative is to operate in ignorance of these problems and missed the opportunity to reform. we've committed to the audit and implementing the necessary forms and i appreciate your support. thank you mr. chairman. >> thank you mr. gibson. >> thank you mr. chairman and members of the committee for the opportunity to testify today regarding the aggressive work we are doing to bring greater efficiencies to the business operation in the department of defense. any organization which receives capital for its business has a fundamental response ability to execute in the most effectual manner. given the american taxpayer has provided the capital to fulfill the mission we have the highest
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level of judiciary responsibility to continuously execute our operations in the most effective and efficient manners. we work hard to establish support to the predictable funding strain and the working of a foreign area. thank you for the committee's work to establish the steel. the secretary has outlined three main lines of effort for the department of defense, to building more lethal force, strengthened the traditional allies while building new partnerships and reform the department's business practices for performance and affordability. the responsibility and the chief management officer and the department of defense to execute the third line of effort come in reforming business operations for the solvency and security, gaining the full benefit from every dollar spent. looking forward to the department is not anticipating something about thfunding of ths for the fiscal 219 budget.
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in order to find resources for the military needs to achieve its mission requirements. we must cover the cost of operations to yield its resources. the global challenges of the military remains tha second comg of the best equipped are the men and women in uniform to meet their mission. we must consider significant reforms in the department. foundational to the vision of success in this area is the establishment of the culture. the performance and productivity on the enduring institutionalized basis. the work we are all doing today becomes a benefit for the next generation's leadership and fighters to come. we are generating additional resources for efficiency by focusing on three main areas, shared common services, enterprisenterprisewide data ant information and the effective and efficient alignment of enterprise. we've begun the shared services by forming the integrated subject specific teams to
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identify that and implement the opportunities in the respective areas. knowing the challenges to any significant reforms we are constantly fostering a sense of urgency, maintaining leadership alignment at all levels, communicating a consistent message, proactively removing obstacles, driving immediate plans and working to anchor all of this in long-term behavior and culture. as we implement the reform efforts, we are comfortable incorporating the operational tempo to allow us to pilots, learn and scale in each of these areas. fundamental to this is governance and management. we informed the management group to guide these multiple efforts. this integrate with cross functionaintegrated cross functd fosters ongoing working relationships aligning of the stakeholders involved in the reform efforts. as the process matures we will form an integrated mission
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aboard. this will utilize relevant standard measures and goals coupled with the authority to manage and enforce institution the culture of performance productivity all the physical continuous improvement in the business operations. the reward process is essential success in the primary incentive to change behavior specifically in the department efficiency efforts are stimulated by the need to back fill. the current approaches to drive, and synthesize performance operating financial efficiencies by measuring, tracking and performing. we will then return to reinvest in high your priority is and hold those people accountable. we will need your input and assistance in refining and fomenting and executing as we further defined the mechanics of the rewards process.
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quality data is essential to good decision-making and wthegoe working to improve the infrastructure to make it timely, accurate and relevant across. additionally we are constructing a framework that reflects the cost data and analytical tools to support efficiency driven decisions throughout the department. in both efforts we are working closely with the undersecretary of defense, the comptroller to achieve success. the financial audit department has undertaken a tremendous tool and serves as an invaluable piece to the efforts. the process will improve the quality of the organizational and financial data which is essential to good business decision making. it will also reveal business systems and processes that need to be reformed and can be incorporated into the ongoing reform efforts by improving these business processes we drive the operational measures such as timeliness, productivity and simplifications.
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many of these have direct positive impacts. the third line of effort is the department of many agencies and field activities have been in place for decades and we have the opportunity to look at the processes in the major areas of operation to outline all of the participants in the most efficient manner we intended to include and leverage the leadership in the military department such as acquisition, information technology, personnel readiness, financial management research and policy all as a part of the process. the basis for all his establishing benchmark private-sector measures setting goals and tracking and reporting. in addressing any of the reform projects we are also looking outside the department for further by incorporating the whole of government. as the efforts progress we've will be looking to the congress as a source of support. just as with any board of
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directorboard ofdirectors the bs our partner understanding the shared risk in this work we intend to keep an ongoing dialogue with you in our plans and processes and they will be e seeking your feedback and assistance in some of our object is to require mutual actions to achieve our goals. as the chief management officer for the department i can consider congress board of directors and on the substantial efforts we are making in the department. thank you. >> i can't tell you how exciting it is for me to have the numbers management team before us. it's your testimony is music to my ears and i want to thank you for your prompt letter. had i gotten it a week from now i would have considered it
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prompt. we will now turn to questions and i don't think i need to describe healthy working back and forth works but there will be five minutes for questions beginning with myself and then we will begin the alternation process. i will begin with my first question for mr. norquist and measures for their readiness for an audit are often very difficult to understand even for outside experts. now that the consolidated audit has begu begun how well the difference and help congress understand how much progress is being made and well the pentagon provides regular updates on both the findings and your remediation efforts? >> yes mr. chairman and the way we will measure progress going
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forward is by looking at the number so when there is a finding we will track the number of findings and who they've been assigned to for fixing them so rather than simply say the department of defense didn't pass we will be able to say this material command has been assigned to a finding which they closed. this organization had seven so you will be able to see at a much deeper level for the part of the interest is that level of accountability so you can talk about specific challenges in the issue with the systems and the balance with the treasury. from our perspective the auditors will publish their statements on the traditional schedule that starts november 15 and those are available to the public. they will look like the same type of financial statement reports that go out for companies and booth in january and june we will provide updates to the committee summarizing
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those in and easier to an easied format as well as providing tracking. the advantage i think of this one is we will not be self reporting our progress. i will be telling you what the auditorfor theauditors have saiy don't say we didn't close it, the issue will be i think that independence allows you a greater level of confidence in the data you receive on the status of the audit and allows us to track it. this is how we did it at the department of homeland security. >> thank you. mr. gibson i want to ask about the metrics and baseline a little bit. last year the gao reported that the savings from the department of defense headquarters reductions were unsupportable. similarly, the department of defense budget request this year claims further billions of savings from the ongoing reforms and it doesn't provide much specificity in the department providing more detailed breakdown of the savings and ith
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these ones are being used to construct an? >> the way we intend to execute this is a working level we have teams that are subject to matter experts in different areas and out of that they will take specific projects to go out and within each of those there will be outcomes operational and financial goals that will be based on real data. they will have a project schedule we will be able to track and measure how they are doing on that. we can then compile all of those into groups and report them out so we intend this to be very specifically driven by data that we are tracking and reporting on and then all of that will build out to the total of what we can account for reform savings we will be getting.
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also, i think it's important to measure that in addition to the financial savings it is very important that we discuss we are going after operational improvements as well. this could be timeliness, productivity, simplifications. those don't always have a financial outcome, but certainly the beneficial outcome for the overall business operations we will be measuring and tracking and reporting on those as well. i read a number of stories lately about how the pentagon can't responsibly spend the extra fiscal year 2018 funding from the recent budget deal before the end of the current fiscal year. marine corps general walter said we ha have a years worth of mony and five months suspended.
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i understand the proposal is to get more flexibility in spending including changing from a 2018 operations and maintenance funding from one year to the two-year funding. beyond this current issue is the biannual appropriations for certain defense accounts. there's two types of challenges we look at we can come back to this. there are rules to encourage people to spend their money earlier in the year and one is called the 8020 rule you can only spend 20% in the last part of the year. when you get the bulk of the monemoney would increase late ie year that makes it harder so some believe that is certainly essential because then your deadline is in the first of october buisn't the first ofocts
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earlier. all of these relate to wanting to spend the money are the highest priority is and as you get closer to the end of the year, you don't have the time to go out for the contract with the competition and the award with the amount of time that's left or if you put something into a shipyard for maintenance and the cost is less than you thought so they give you the money back if need be too late in the gea yeao put it against your next so you put it to the one available. we like to discourage this sort of use it or lose it and encourage people to put it on the highest priority and when necessary look at what type of flexibility is required either to move money between accounts with prior notification. some of those flexibilities help and this is true whether it is a significant increase or not you just want to make sure people can put up against the highest priority. >> i'm sure we will talk more about that. my time is expired.
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>> mr. gibson, they've reported that nearly one third of the roughly $1.5 trillion cost of the current defense acquisition programs is a product of cost growth over initial estimates which suggest the department has trouble either estimating cost or holding contractors to original estimates. now, we are looking at a proposal to spend something on the order of $1.7 trillion on nuclear modernization and platform warheads. there've been warnings issued that if we were to do that, they would wipe out other defense programs. so i guess there are two problems i would ask you to comment on.
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we seem to be experts on here about that. are there additional controls that we should put in place over the nuclear program to make sure it doesn't have the same fall likwith the other programs with massive cost overruns. >> in the area of contracting with, it is the common purchaser of goods and services into doing that in a more effective manner that is an area that i am specifically focusing on. what this does is take a look at the contracts from a very common private-sector practice to set
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the terms and conditions and look across the market to best the right value. we are also looking at setting up requirements and again, common service contracts so that it's the same across. >> what i was trying to get at is this a massive oncoming expenditure like the $1.7 trillion for the nuclear modernization program gave us an occasion to take a look at new and different controls specific to that program to see if we can learn something from it and not have it fall to the same fate as the existing massive cost overruns. >> i believe the opportunity to cross all acquisitions so the area that we are focused on, absolutely we need to do that. it's good fundamentals and business we look forward to this nuclear modernization program aninto the additional way to mae sure that the estimation and accounting is done.
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>> i think that is foundational to doing things right. that's how we need to do it. >> one last question. the contract management has been on the high risk report list for almost 25 years and there are obvious concerns about the relationship between the defense department, defense contractors, the contractors rolling congress as a kind of loop that can exist and if it is the revolving door problem between the department of defense and the contractors with the view are there things that we should do to improve the revolving door issue between the department of defense and the contractors to make sure that it
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remains a healthy to the contractors. >> it's my understanding that between the policies as well as our ethics, those are in place. i think it is always our responsibility to follow those to ensure that we truly get to the best place from a contractors standpoint in the conflict of interest standpoint. >> you agree it is vital they should be serving the defense department and not vice versa quick >> leveraging the private sector is absolutely invaluable to us. we are the customer and they are the supplier. >> my time is up. >> thank you for having the hearings and to the two of you, thank you for coming.
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i don't think any of us respect more or cut respects more our men and women in uniform and i know you work on their behalf and we couldn't respect them more. i just went all watch as a skilled people remotely the proposal and other places but from people far away commanding drones and it's just remarkable we are able to do things like that. they have the capacity to turn entire countries into craters and all kinds of cyber capabilities. again you are her here, you aree messengers we are not necessarily speaking to you at home. how is it that 2018 with all the massive capabilities pentagon has come of this is the first time the pentagon is able to conduct an audit what is going
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on in the culture i and the pentagon tax >> when this administration came out it was critical so in the first year we have begun it when i was -- spinnake >> how in the world could it be a id cannot audit it until 2018. >> there was the mission focus that isn't as focused on the back office as he could see in a private company. company. there is an essential value to making sure the rest of the operations go well and part of the messaging that has been made is to make sure folks understand this is much broader than just financial management. if you want to make sure to
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spare parts and ammunition is correct this is part of the audit covers and part of that comes from change from the leadership of the top of the secretary and deputy secretary of and the others quite frankly the emphasis on congress. it's helpful -- >> i don't care about congress. the fact is we probably wasted hundreds of billions of dollars at the pentagon through the years through the poor management is that correct? >> i wouldn't be able to speak to that number. >> thank you for giving credit to the committee. we have four people in a room that picked each other up. this deal is going to raise spending over the next ten years by a minimum of $2 trillion.
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what we are likely to see is some of the most god awful taxpayer abuses that we have seen because things are being sent up so quickly and on the domestic side on defense so much money is being pumped in that there's going to be again some of the most god-awful abuses we have ever seen. some of that could take place at the pentagon. it $80 billion. with the president requested wasn't good enough, had to go 30, 35 million above that. now we are doing the same thing on the domestic side not quite that level but how is it possible with six months remaining in the year for you to possibly spend the additional cap, the traditional amount of money the $80 billion plus 71 billion how is it possible to
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spend the money wisely? >> happy to answer that, senator. when you look back at the increase you will find the vast majority occurs in procurement and r. and b.. when you talk about buying additional planes and ships you have time to negotiate prices with the contractors. ththe challenges could be the operations of maintenance accounand maintenanceaccounts ae between how we stay under the sequestration and how we stay under the number of the congress is looking at is in the order of about $13 billion. some of that the president requested and we have plans for in the budget so the amount of the adjustment is more modest than the larger number you are seeing because only those have to be executed by the year's end. >> we think you and others for what you're doing. i am happy that in 2018 the are
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finally going to have an audit that is good for the taxpayers. i cherish the men and women in uniform at the others that ser serve. there've been massive amounts of wasted money and i'm glad you are on the path to do something good about it. i do hope that we have a chance to a few days in advance i have a feeling taxpayers are going to be shocked about what is in it with the massive tax increases taking place in one year. thank you. >> senator sanders. >> thanks very much.
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i agree this is an enormously important issue and the dod must be run effectively and efficiently. i want to start off with a simple question. about half of the budget goes to defense contractors. is that right? >> that sounds right. >> at the top of the list is lockheed martin. >> answered this one. as i understand it, i am looking at the revenue of 2016 defense revenues that went to roughly $43 billion. and i'm just kind of curious about this ceo of the corporation received whacorporas
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it, 20 million? as i understand over 90% of the business was the department of defense in other words we have given roughly $18 million salary from the taxpayers of the country. does that sound right to you as something that we might want to look at and say i don't know what the salary is, what is up 150, $200,000? to pay to the secretary defense 200,000 or less and contractors who gets 92% of the revenue from the tax payers $18 million. is that something that you might want to look at? >> i can't speak to how they compensate their executives. there are rules outside of my expertise. we do have one inside of the office, but we have an organization that audits the contractors so when they send in voices and payments, we go through them in order to arm the
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contractors to make sure we are not being charged. .. or should the taxpayers be paying their salaries? >> the taxpayer should be paying for the service we receive senator. >> is an issue worth looking at? >> i don't know if the salaries fall within that. >> they might pick up me ask kind of a bunny question if i might. the truth is everybody supports
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the department of defense and we all support the men and women in the arms -- armed forces but we are now spending the next 1200 in combined on defense. congress has voted over 165 million to go to the military. who are we spending? we know that there are threats out there and we are all aware of terrorism that the amount of money that we are spending fighting isis for example is relatively small. who are we preparing to go to war against? >> senators the secretary of defense outlined in the national defense strategy to challenge that we face part of it is a shift from a focus on terrorism to great power of competition with a particular emphasis on the long-term challenges of china and russia.
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if we go to the opportunities for peaceful competition and the ability to prevail the strategies are classified and unclassified goes to the challenges that we face. >> so we are spending hundreds of millions of dollars defending ourselves from china welcome major corporate after major corporations shutting down in the united states of america and moving to china. >> i think the white house and the present president and others have talked about the competition expanding and my expertise is more the defense side. >> thank you very much mr. chairman. >> thank you senator sanders. senator kennedy. >> thank you mr. chairman. has the audit a gun? >> yes, senator. >> i want to thank both of you and i want to thank president trump ford doing what the law
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directs them to do. under the 1990 statute, what position, not what person but what position at the department of defense was responsible for initiating the audit? >> i'm not sure of the language but the audit is conducted by the ig. >> who is responsible at dod under the 1990 statute for saying i have read the law, we are going to start this off. what position? >> i believe it be the cfo or the secretary depending on how the language is written. >> will you get me the name of every cfo who has served at the department of defense the statute was passed? >> i can do that senator.
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i don't know where to begin. senator corker is the conscience of the senate on our deficits and i first heard him speak about the fact that the department of defense has never been audited at a meeting and frankly i thought he misspoke. i couldn't believe it. i can explain this to my people back home. every single one of them supports a strong defense but when i tell them that every other agency in the federal government undergoes an audit by the department of defense and it was required to do it 18 years ago and still hasn't done it
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they think i believe in a straitjacket -- along in a straitjacket. how does it go on 18 years? didn't somebody ever call the cfo and say have you started the audit yet? >> i will attempt to answer the question though i come from your perspective which is five view the audit as essential and something we need to start and with my experience in dhs that's exactly but we did. the types of answers you will hear is its large, complex and it will take longer than the tenure of the person there. my mind those arguments are start. not too way. there are things if you are not able to answer the sample requirements of the auditor they can even begin in the department have they not been set up that way.
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direct nice my live is we started and the contracts were set in place that allowed us to do it now rather than putting out contracts. >> let me put it another way. i have read that the department of defense has more federal contracts than all the other agencies in the united states federal government put together. >> i don't know if that includes grants are not. >> if i ask you for a list of all the contracts in the amount would you give it to me? >> that is something we are building. >> you couldn't give it to me? >> not easily. it's a very long list. >> we don't even know how many contractors we have? >> there is the requirement that the congress is put on the
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department and others to usa.gov usa.gov. >> let me interrupt you because i only have a few more minutes. i see where you expect to spend $367 million this year to conduct the audit an additional 551 million to fix the problems. how do you know it's going to cost 550 mundel in dollars if you don't know what the problems are yet to? >> i don't know how much it will cost to fix the problems. i know how much will cost to take the problem on so we been able to break it out according to the army and navy spending on fixing problems. >> some hogs who have all 4 feet in their snout in the trough and
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we need to find out who they are. we need to pass legislation to require this to be done and make a criminal. somebody goes to jail or somebody is fired. i would or she aired by some that. i can't explain this to my people. >> senator king. >> thank you to the witnesses. i associate myself with most of the comments that have been made and senator corker sense of what is wrong with the culture. i'm an armed services committee member. a giant the committee in january 2018 and senator king join with me. i also think senator graham was on the committee at the time. i'm a numbers geek. i was a mayor and governor and was used to audited financial statements and we were stunned to get on the committee and find the 1990 statute notwithstanding
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the pentagon had not made greater process. they were trying to become audit ready the time that there was a meaningful calendar. it was the 2014 nba that we worked on in committee. we shouldn't have to do it. it should have been done long before that it is good to see you making the progress that you are making. i think the written testimony is very help of. mr. norquist talked about the scope of this audit. it's the beginning audit and it will find a lot of things wrong and it's not as raw as it may be that the 24 audits and the single consolidated audit are all underway right now. i would encourage my colleagues to look at the chart on page six of mr. norquist testimony which
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sets out the timeline of what is to be good. there's one item on the timeline that i don't understand and i'm sure there's an explanation. march 2018 ranking report sent to congress for that was an armed services we are worked in on the ndaa now so i'm assuming it's a rep are coming out at the audit report that would be helpful to us as we are worked in on a finite teen. is that what this report is? >> with that committee assists do was to rank the components by the progress they have made so of these 24 agencies they went under audit. i thought it was eight and nine total. the largest army and navy and air force is when they start so
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what we been asked to do is to rank progress and we will do that every years the concert to see in the idea that the chairman mentioned who is making the most progress in closing those open findings? >> i think that is very important. we will be old able to taken this audit work that's being done functionally and use that and that will be enormously helpful. senator corker said i want to ask about the pentagon. we haven't insisted on it with the pentagon. the pentagon under both parties will submit a budget request and congress will give them whatever they asked for it it's the same phenomenon here. i think it's important to
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continue to insist and you are located or partisan agreement around the table that we should. your inclusion isn't working. i have faced the audit process in many places where processes are broken. there will be unpleasant surprises. some of these problems may prove frustratingly difficult to fix. i think we have to be prepared for all of that. if we don't do them right, if we do them right we will get a lot of bad news but that's important important. that's just what satisfies but there's enormous upside opportunity if you spend money on the wrong thing then you may
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be underfunding the right things or you may be using tax dollars that you shouldn't be using it should go to some other purpose. this is an important thing. if i might mr. chair for 30 seconds audit is not going to tell you everything. we had a hearing yesterday about airpower on the navy side in the subcommittee farm services and we talked about the f-35. has it been worth that? it has fantastic capacity that he said we should have added 10 years ago. the cost overrun and the delay part of it was putting in technological requirements such as software is very difficult but the other part is we tried to do something creative. let's build a platform that can
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be used by the air or summary and navy and army and take all specifications into account and let's build one that we can sell the nato allies to. what that ended up doing is creating a decision-making process that was a complete morass. it turns it into a decision and so do we get economies of scale? maybe. do we get interoperability? yes but the delays across organizers hope the other one necessarily answer all of our effectiveness questions. thank you mr. chair. >> senator perdue. >> i echo and support most of what has been discussed today. i chagrined that is chagrined that it's taken us this long to get to this point but it does
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have the quick question mr. norquist. how long will it take to get an opinion in the weakness deficiencies? when will we get a clean amendment? >> senator i don't know. >> what is the range of expectations? >> the benchmark i use the homeland security took 10 years. the number of weaknesses came down steadily. >> it's your expectation we have an estimate of the number of significant deficiencies etc. and their remediation could take years but how long will it take to determine what work we have to do? >> the bulk of that this fall when the auditors finish their first audit that i would anticipate in the second year they will be able to go deeper and cover more things. we will see the vast majority of the findings we have seen?
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i can imagine walmart calling the irs and saying i'm sorry the quarterly statements are going to be in this year. 10 years are outrageous. we have got to find a way and there is no public corporation in the world that would be allowed to remediate. it's just not necessary and i wanted to address that in the teacher conversation. there is one reason to explain why it's been 28 years. congress didn't do its job. they didn't do anything to enforce it. it's unacceptable and never should have been accepted that but i want to talk about going forward. senator whitehouse talked about trillions being spent. the rally in the last decade less than a third of what we
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spend that means the next 10 years the current forecast if we continue add this the way we have added in last 10 years away the current presence as we will that by definition if the first goes to mandatory expenses which it does every dollar that we spend in discretionary spending the dod the va and 315 million dollars total discretionary domestic spending its borrowed money. we have to go to china and borrow so these situations around the world sirs bilateral agreement. we have to go to china and borrow the money to go-go to taiwan into it. this is how serious this is. my question is when they talk about procurement a lot of these contracting relationships are dealing with procurement could i believe the procurement process and the cr impact the cr reality of a broken budget process and when you do these audits are you going to measure the impact of continuing resolutions on the
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procurement process in the ways that are found there? >> the audit itself does not do that but what it allows us to do because of the type of information we get out of the audit is to drill down into exactly those types of questions questions. is i understand there is no common chart of accounts. that's part of the delay. we run into those problems or obstacles we need to know those on the front end. i want to talk about the sequester and also the fundamental measurement of the effect of not having a capitol budget. you answer the question earlier about normal operation procurement and replacement of
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ammunition and supplies etc. but we are going to spends $26 million a year for 10 years. that's the current estimate of and my concern is about 26 billion goes to for x or 5x we are talking about numbers that are unattainable. my concern is are we in this audience looking at the picture my process and finding the inadequacies directing changes the way congress deals with funding for the defense department. there's no capitol budget. that adds billions of dollars to our procurement process. over and above design creed. those are all real, no question about that and we talked about that but the one thing we see looking at this the bigger contribution is we don't deal with it in the capital budget limitations would put on the funding from the federal government create this
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tremendous opportunity to waste money on a procurement process. would you respond? >> senator the way the information is currently stored you don't have what you need for the capital budget but when you look at what the standards require valet and your assets that gives you the basis. one of the questions for congress becomes when you have that type of information you want to change the way you manage the funds. you wouldn't have that today but he will build up that type of information. >> thank you. >> thank you mr. chairman and welcome to both witnesses. i want to associate myself with the comments that have been made by my colleague. my question relates to the contingency operations. as you know we have funding in the base for ongoing operations which we expect to go on in the future and then we have the
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overseas contingency operations account. there has been concern on a bipartisan basis that oh has been used as a slush fund because it's not the subject of the budget caps that have been placed on defense spending and non-defense spending. in fact when i was in the house of representatives i teamed up with nick told they need conservative member of the house and now director of omb and we put language into the 2016 defense authorization bill asking the defense department to adopt omb standards for what constitutes oco funding and overseas funding. since then in january 2017 gao issued a report recommending the department of defense work with omb to develop criteria and since then and 2018 the defense authorization bill we passed the congress and struck the defense department to develop criteria by september of this year.
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>> we have develop criteria to go through the oco consistent with your previous discussions. you won't be surprised to know that in the out-years few of them account for daniel panico only the most incremental show up which have dramatically reduced the size. >> would the of objection to the congress codifying the criteria to avoid any monkey business in slush funds in the future? >> let me talk about the overseas funding efforts because we all wake up to tweets these days by the president of the united states in a few weeks ago he tweeted this quote this will
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be a big week for infrastructure after so stupidly spending $7 trillion in the middle east. it's now time to start investing in our country. that was the president's tweet. are you aware of how much the trump budget calls for overseas contingency cut spending for the next 10 years on the defense side and a smaller portion of the state department? >> i understand over 671 alien in the ap and a similar number and then they shift to the sustainable costs things that are not in governmental and then its 20 billion a year for the next five years after that. >> you don't know where the conflict is headed. >> based on strategy of the next coming years. i hope someone will point out to the president of the united
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states when i added up that comes to boarded and 47 billion dollars over 10 years which is more than twice as much as he asked for in his infrastructure plan. he asked for 200 lean dollars a year for our country to support infrastructure. he's asking twice as much for what he referred to in his tweet us stupid overseas operations. i hope someone will bring that to the attention of the president the next time he decides to tweets. let me ask you about the out-years because you have as you indicated the oco funded at $66 billion through fiscal year 22 i believe, fiscal year 22/23 in-app or that it goes to $10 billion per year after that produce you say it's a placeholder. is there any basis for choosing 10 billion because the senator corker said these numbers quickly add up over time much
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more than anticipated. you are dropping it from 66 billion in fiscal year 22 to 10 billion in fiscal year 23 over a 10 year window. that's a savings of 516 billion dollars if we drop back. my question is what is the criteria used to come up with a $10 billion as you look forward and mention the strategic plan with respect to china and russia and the other threats that may be out there? >> our budget without 22023 and it's based on the static projection so we will adjust as the requirements change on what is required. i believe that bound the five-year window isn't on the estimate based on where we think the direction it is hitting pages to clarify and original submission for the budget the expectation was 169 going out.
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omb wanted to ship 220 and oco so there's less than the contingency fund. >> the net effect of that is to obviously reduce the overseas contingency and i was just wondering if there is any strategic basis for that egg drop. thank you mr. chairman. >> thank you mr. chairman and thank you for your appearance here today. a lot of the questions and answers today have focused on the past and what has happened in the past and why we are where we are today. both of you are relatively new to your positions and we appreciate your commitment to completing the audit so let's look forward and tell us mr. norquist in the briefest terms what do you hope to
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accomplish with the completion of the sada? >> i hope to accomplish three things for the first is to put more relevant and timely information in front of decision decision-makers so when they are trying to make decisions about the organization they have relative data. the second is to provide insights to reform efforts where we discover broken processes are things we can save money by changing the way we operate and the third is to be able to make ratings of data analytics to rely on the underlying data and the transparency requirement to the american people and congress congress. >> senator i find the audit as mr. norquist said the data is incredibly valuable. we are looking at putting and cost analysis tools so once you have the good data that whatever the user and the operator is
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will have good cost assessment so they can place assets where they can be managed and those that don't, don't. the second is the systems themselves. what we find is they often contribute to some of the week this is. this fits right into our significant areas of reform which is i.d.. that contributes overall good business processes and last is the ability through this process to discover areas that the weaknesses translate into true discovery of good information. already we have had discussions about how affairs are managed in the navy. just two good examples of once we have better clarity there we can then better manage each of
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those both from a financial standpoint and those that contribute to readiness. >> the final point is that it's on the front lines in that dennis tan or iraq and maybe faster access to parts or ammunition or what have you. >> i think the answer is definitely yes. all of this contributes to the secretary's first priority. mr. norquist you were nodding your head in vigorous agreement. >> be a mentor you know when you're going to get it. >> what do you think is the magnitude of the savings for this department? >> i think you will see savings.
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a streamlined neck are seeing reduced the costs. those are not enormous numbers but they will be valuable. i think the third one which is understated belly of the audit is congress passed along the information security standards. the auditors check those. they do cybersecurity testing on each of her business sections. it's an enormous cost avoidance. i think there is an upside but let me defer to mr. gibson. >> let me put the numbers on the table. the 2019 budget request suggested internal business reforms could stay a little over $6 billion. if you ran the department like a business and that would mean eliminating the civil service work rose which i don't think any members of this committee or
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this congress would support but all the root legal requirements say we got 25 billion dollars a year. i put those numbers in the table table. could the results of this audit reveals savings from that magnitude are larger for 25 billion according to the 2015 business? >> i think we have laid in its billion and owned the put 46 billion in. we are comfortable that we will meet or exceed those numbers and direct way to the audit, the audit is as i mentioned earlier a great tool to help us get there. it's in addition to other reform initiatives. lastly on the cpb i can tell you i fully embrace what has been suggested.
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we took some of the specifics were they said focus on the none shared service areas. we have done just that. we actually added three additional areas to what they suggest and the last part of that i think is while the gos are shared in common corporate type services we always have to remember our main mission is the less validate who we are. that impacts inventories and supply chains and then lastly very simply we are in a more regulated environment than the private sector but it should not be lost in the spirit of what they report does we fully embrace. >> thank you for those answers.
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$6 quintillion to hear, $46 billion over the plan would be great. i have to point out we just increase the defense budget by 85 billion dollars in one year and that's the result of seven years of living under the deeply flawed budget control act so i admire you but it's really congress's responsibility to fix this problem. >> thank you mr. chairman. let me ask you if i could commissioner norquist this issue of auditing the pentagon is the longest running battle since the trojan war. it is gone on and on and comes down to $85 billion more for the pentagon we have a budget for medicare and medicaid say you have to put this in perspective. when i was reviewing your testimony one sentence really
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leapt out at need. he sent her testimony it's going to take time, your words, to move from qualified audits to clean out its so i'd like to know are you telling me american people with that statement that maybe it's going to take another one year to move from failed audits to clean out its? how would you explain this to the american people? how long this is going to take? >> not knowing the findings i don't know how long it's going to take. >> how byron estimate? the public at least deserve some kind of estimate. >> the only benchmark in i can uses homeland security took 10 years and part of the reason it's a bit of the challenges when you think about the money they auditors are are talking about there not just talking about the money congress appropriated in 2017. for err the congress awarded eight years ago was available to
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obligate in five years to disperse. the auditors are welcome to take any transaction and asked us to document those transactions. my concern is the cfo is there some of these choices that i don't know the information we will get is worth the expense. i would want to come back and say this piece of equipment is going to go out of inventory and in three years. you want me to spend a lot of time valuing it or do you want to let it roll out of her inventory? >> at my town hall meeting this weekend people are going to ask about weight and compare various items in the budget. think based on your answer i have to tell oregonians that it is going to take more than 10 years based on the fact that you compare it to something else and
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move from a failed audits of clean audit. that's a yes or no answer. >> to get all the way to the clean opinion that may well be true but the benefits will be seen right away. >> i'm going to take that as a guess that it's going to take more than 10 years to get a clean nodded. i would really like that yes or no off answer because the public deserves that. >> absolutely senator. >> as i right? okay. let me ask you about one other issue. we have several policy analysts over the years tell us that they don't think the auditor would like to cover -- uncover new inefficiencies. if an analyst says they are going to find many things that are that it inefficient why does
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it take by virtue of your last answer to me more than 10 years to get a clean audit? i'm trying to reconcile these two. do you agree that not many efficiencies will be found? what is your opinion now based on the fact that the works in this field for a long time to read what is your opinion today? >> that you will find places for savings and things to improve the accuracy of the data and you will find chances to improve inventory. >> i'm going to hold the record open and i would like the best estimate on that because that goes to the question of again trying to explain to people why this has taken so long. everybody else's government gets audited. businesses get audited. it really is the longest running battle in the trojan war and by the way you are watching into
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it. this is not your doing but you are going to be the point person on this and that's why i ask more pointed questions. thank you mr. chairman. >> mr. boozman. >> thank you mr. chairman thank you for being here. this is a huge task and it's so very important. appreciate the emphasis on the business practice reform approach that you are taking. certainly your work on the audit is going to be so important. i have appreciated the three things that you're going to get done. on the other hand you are going to hold people accountable and i know our chairman and ranking member very well and i think i
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can speak for them and the committee that we are going to hold you accountable in the sense that you have taken on this huge deal. as you heard from the committee there's a lot of frustration not only on this committee but throughout congress. so we are going to get this done in a timely fashion. the services have an audit and i don't think they have been completed for various reasons or whatever but the auditors got in there and made a lot of recommendations, hundreds of recommendations. would it be learned from service audits in the air force, army whatever and the navy. was there anything to beat leaned from that? >> yes senator, there are couple of things. one of the overarching findings was that there is often a gap between what management believes is being done based on the
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policies that were issued expecting those policies are being followed and then you go into the field and you discover they cannot operate according to those. the information allows you to recognize either have to change the policy or change the way we operate. that's a battle bull tool. >> we are able to go ahead and follow up on that right now where have we started already or do we have to wait for the timeline? >> this is the point that i want to try to follow up with the senator which is we will get those findings each year. we will start corrective action plans right away but what we need to do is prioritize those. there are the other ones where i go it's important from an accounting point of view but you want to be conscious of the money you spend to issue that goal. they want to strike that
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balance. >> are there other things? >> i think the army found blackhawk helicopters that had been delivered but not yet loaded into the appropriate system. the air force looked at 12 facilities and found 400 buildings and structures. people in the building how much i need to do to do maintenance am i building? those types of issues and some name the tories the accuracy of that affects a better operation and perform. the fiscal year 19 defense budget saving of $2.9 billion including reforms in health care
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management. can you give us some examples and talk about health care management? do you have efficiencies about about -- ideas about efficiencies in that regard? >> we are looking at it in two ways. there's the 7-up to requirement to look at health care. we have taken the opportunity to step back with the services and dha to say what is the optimal way to truly organize the relationships. dha provides facilities and support to get there. the hard part is defining the roles and responsibilities and how we would roll that out. we are in the middle of that
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right now. the goal is with the service having the ability to provide the ready force in the most efficient and effective manner and to support the rest of the medical system also using private sector and government resources. another way we are attacking this sir, we have the health care team and that cross functional team looks at specific projects which are enterprisewide. it could be management of pharmacy services. it could be reimbursement from third parties. frankly it could be, and buying a professional services and those we know are relevant across the enterprise. we are looking at those in implementing those immediately. >> thank you very much and we do appreciate your teams for their hard work. thank you mr. chairman and senator sanders for holding a
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very important hearing. >> thank you. senator sanders and i have additional questions. >> thank you mr. chairman. >> i think the elephant in the room here is the relationship of the dod the defense contractors. that's the area that needs most research and in that regard i want to touch on three subjects. number one i want to get back to the issue of ceo salaries. two of the top defense contractors have ceos that make at least $20 million a year despite the fact that over 90% of the rescue comes from federal government. i worked successfully with others to make sure that workers working with federal contractors in minimum wage of $7.25 an hour
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hour. we said if you are working for a contractor paid by the federal government you should not get a starvation wage. i would like to report you as to what you can do to say to ceos and defense contractors that it does not make a lot of sense that they are making 100 -- 100 times more than the secretary of defense. i do think it sends a message if a corporation gets the overwhelming percentage of its revenue from the federal government to give the ceo of large salaried tells me they are going to do a lot of other things for tax. but i would like you to get back to me with some idea as to how you can negotiate with a large defense contractors and tell them they should not be paying their ceo.
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that leads me to the issue of defense contractor. since 1995 lockheed-martin has paid over $667 million in lines related to 85 issues of fraud and misconduct in has taken in more than $550 billion of federal contracts. procurement fraud and the list goes on. in 2007 lockheed agreed to repay the federal government 265 million overbilling on the f-35 program. i shouldn't just point them out. what are we going to do after
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giving ceos and these defense companies huge salaries and tell them they cannot continue to rip off the american people. what strategies should be used to prevent future fraud better the strategies we should be concerned with? >> senator waste fraud and abuse is always something that should be rent and center. it's my understanding in the process we have numbers of policies that must be followed and there are checks and balances along the way. it's my understanding miss the lord is focusing on this not only with specific contractors. >> mr. gibson would be fair to say we have not been terribly successful up to this point with every of major defense
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contractor has to reach settlements? >> senator really don't have anything to base an answer on whether success or failure. >> i would say anytime we have waste fraud and abuse i am concerned. >> can you tell me that this will be a major priorities plex the defense contractor repeatedly engages in fraud at least something that one company did and maybe they should know they cannot continue to get away with that. >> senator hirono this is a priority and i fully support and i'm willing to do what we can on our side to help in achieving this. i will certainly pass this along your passion for this issue. >> which takes me to the third, ceo salaries and fraud and now want to talk about cost
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overruns. let me read from the ceo selected acquisition report of 2017. dod currently has an acquisition portfolio comprised of sending programs costing the public one point $74 trillion. of this growth above the procurement amount. it occurred after programs had begun production. according to gao many dod programs fall short of schedule and performance expectation meaning dod can buy less than expected to the warfighter. what are we doing about it? cost overruns? >> one of the challenges you have with any of these programs
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is the disruption to the budget. it goes up over time and you are disrupting other plans and expectations you have. we have organizations whose expertise is cost estimating to the budgeting process. >> excuse me. i don't think that is the major issue. i used to be a -- so we dealt with competitive bidding and we had a contractor come in and do the streets in the city's for three lu dollars in three months later the guy comes in and says it will be $5 billion. we don't say hey that's fine. what are we doing to deal with these outrageous cost overruns? >> is good to break down the challenges of the three parts. the first one is on the government side the estimate as
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to what the work is going to cause. we can fix that and we have organizations that expertise that can deal with that. >> if i tell you it's going to cost us a billion and i come back a year later and say it's going to cost 1.5 billion. >> the question becomes what changed? it the answer was on the government cited change the requirement the answer is have i started to ask this and was it a necessary requirement change? >> is a firm fixed contract and the level i chill if it is you do to price and that's what you're going to reforma four. >> is the dod done that? >> we use fixed-price contracts with all of the vendors.
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>> is you argument that most of these cost overruns are the responsibility of the dod to change the nature of the country? >> it's one of the contributing factors. i think those are the three lanes of how to break the problem down. >> and tell me what we do when somebody says hey star you have to give me more money for this contract that i agree too. >> i can't speak to that while so i would defer you. it's a very important issue so in the defense contracts that i deal with which are smaller you end up with a firm fixed-price contract. if this is what you said you're going to do that's where we are. it must it's an error we made on our side you are held accountable. >> i apologize. what i would like to get back from you is your idea some old can do about excessive ceo
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salaries. >> i want to thank everybody for their questions and i want to thank you for your testimony then i want to note that this is the first time anybody claimed this effort to do this complete audit of the defense department even though it's been a requirement for 14 years. so congratulations on that. i appreciated the comments today about the capital budget. i think absolutely every department in the federal government needs a capitol ledger and i have kind of the pet t-bone national parks. i'd grew up in some the national parks in wyoming and yellowstone which was the first national park that i was always disconcerted that they were running out of money in august and talking about shutting down the park. i asked them for their expenditures which they wouldn't give me.
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i believe with pressure after just 20 years i have a list of not only yellowstone park but every single park in the united states, the facilities they have in the cost of maintenance and i'm hoping we can continue that and get that into every department of the government and began to manage what we have, having an audit is the beginning part of that. i'm also pushing for a buy and mail budgeting and i think every agency would spend their money more actively than you ended dance before october 1 or whatever date was set for that in the fiscal year how much they would spend over the next two years. think there are substantial savings in not trying to spend that last amount of money in the last portion of each year. i'm hopelessly break it down so
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that we only cover half of the appropriations each year but for a two-year period that we can get a lot more scrutiny and to what we were actually buying as well as having the people be able to spend things more effectively. you gave an example about the improved financial management in terms of costs to senators boozman and i appreciate that. senator wyden asked questions about when this process would have a clean audit. of course we are hoping for a clean audit it for 10 years but the public's understanding of a clean audit is i think a little bit misleading. what we are talking about is getting improvement to the point of perfection and typically nobody gets to perfection. if they do then our auditors
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maybe are doing their job. there's always something that ought to be reviewed and every business including the military has to be reinventing itself and are because of changing conditions around the world. that requires doing things differently and when you start doing things differently the audit will turn up different things that maybe shouldn't have happened but that are correctable. unless we do these audits which the purpose isn't to play gotcha with the department. that is not what it's supposed to be done with it. what's supposed to do is to reduce errors as much as possible and come up with a better business plan so the object gives for what we are funding actually get accomplished. i am the chairman of the budget committee and i'm just floored by how much money it is that we spend. i've really have no concept for
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trillions. i'm still having trouble with billions and i'm trying to master billions of i'm not sure about that yet either but we spend trillions. there's no business in america or the world that handles that kind of dollars especially every year. our challenge and this is the first step and i want to congratulate you for taking the effort and i want to thank the committee for the interest that they have had in what you are doing. i also want to again thank you for the confidence in response to my questions. the hearing will stay open so if anybody wants to submit additional questions can and tell the close of business tomorrow and hopefully we will get a quick response from you on those as well. so thank you very much. this hearing is adjourned.
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[inaudible conversations] [inaudible conversations] [inaudible conversations]
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[inaudible conversations] on tuesday, the commanders of central command and africa command testify before the senate armed services committee. on the president's 2019 budget request. live coverage begins at 9:30 a.m. eastern at c-span.org or on the c-span radio app, as well as here on c-span3. ohio governor john kasich delivered his final state of the state address in westerville, ohio. ohio governors are limited to two terms in office. governor ca governor

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