Transcripts For CSPAN2 Senate Hearing On Department Of Defen

CSPAN2 Senate Hearing On Department Of Defense Audit July 13, 2024

Good morning. This hearing on the subcommittee on readiness and management support will come to order. Today the subcommittee needs to receive the testimony from deputy secretary of defense David Norquist concerning the department of defense as 2018 and 2019 audit. Last year when he was serving as the dod comptroller secretary norquist completed the first dod audit ever. Soon thereafter secretary norquist was nominated and then confirmed as eckert deputy secretary of defense with Overwhelming Senate support from both sides of the aisle. He is a wealth of knowledge on these issues and i thank him for being here today. To a a lot of people aside fromy good friend senator perdue who im hopeful well be here a little bit later, dod audit might not come across as the most interesting topic in the world. However Ranking Member kaine and i take our oversight responsibilities seriously and are happy to have this important and timely hearing. Another responsibility we take seriously is one of providing the funding needed to rebuild our military with a specific focus on restoring readiness. Conducting an audit of this magnitude is a massive undertaking as im sure we will hear. In fact when secretary norquist arrived it never happened. The pentagon never completed an audit. Let me repeat that. In its history the department of defense has never completed an audit. Thee fy19 dod audit is one of te largest audits of any organization in history. Over the course of the years year this audit has required more than 1400 auditors and hundreds of dod site inspections. The senators and the inspections evaluate it thousands of sample documented items to account for thedi roughly 2. 8 trillion in d assets. Conduct in other that the size is no easy task but its a critical function the dod must do and the results reveal issues that we all must learn from. They are still much, much more work to be done but i commend the secretary for undertaking this difficult but important task. As of last friday the department of defense completed its second agencywide audit and while it did not receive an overall clean opinion much knowledge was gained fromm actually doing the audit. Im sure we will hear more but over 24 individual audits done across the different agencies seven to come back clean. Why do we take the time to do an audit . And part its to encourage the more responsible use of resources within the department from the readiness perspective the ability to promote real change within the department. While i cannot find cyber vulnerabilities in Dod Technology systems where locating unaccounted for equipment improving the recordkeeping of personnel. It is not a glamorous undertaking. Does produce process improvements and technological upgrades that are long overdue. These improvements are critical to dods response ability end quote its important again full value from every taxpayer dollars spent on defense thereby earning the trustpo of congress unquote. That is from the 2019 National Defense strategy. In other words dod wants congress to continue to fund the military in order to counter Great Power Competition like that from russia and china as laid out in the 2019 and. We in the congress and the American People need to have need to be confident that these dollars are spentme wisely. The chairman faced the nds returning to strategic competition and does represent a prime example off bipartisanship for the support of that strategy and our troops in the senate. Andy s. Explicitly takes the audit as the priority for driving discipline for the department in achieving our overall National Defense goals they hope this budget discipline starts with thet audit and spred throughout the department through all the financial processes within dod including our procurement acquisition and contracting processes that this subcommittee has oversight ofd. Today look toward to hearing about the progress, some of the successes, some of the failures and i know my Ranking Member senator kaine iss also interestd so i will turn the dais over to him for his opening remarks. Seen it thank you mr. Chairman and secretary norquist its good to have you here. When i saw the number streaming into the capital i thought finally it will get the attention it deserves. Their other things going on on the hill onen the hill but i wat to welcome and thank you for your long record of Public Service but also for making sure the auditability of dod is a top priority. Thels fact that all federal agencies were mandated to do audits beginning in 1990ri in te dod has been the last to get in line is wellknown. So much so the nda and in 2016 the Committee Said we have had time, youve got to make this happen. I was gratified to be a part of the committee where we finally gave the ultimatum and ratified this under your leadership the dod moving to get this done. The department announced it officially failed the 2019 audit thats not surprising. There was a great deal of skepticism on this committee. Hey everythings fine. Start something as complex ass this if you are not finding areas to improve and need to be corrected the lead policy makers to questions of the effort. The full committee recently listed her name but she used the phrase efficiency the idea that the outage should drive us to not spend on things we shouldnt to reduce spending on things we shouldnt does away of directing those resources a more department of defense. I hope we can talk about a number of issues today. What benefits have we seen from the audit in its findings. It was always my hope is a mayor and governor looking at audits to learn some things that might improve the effectiveness. I dont think its just the exercise that should lead to saving a dollar here or a dollar there. Should also lead to greater efficiency and effectiveness as well so i hope we can talk about that. How is the process helping the pentagon with counties practices that need to be improved and what resources are being applied attic and what Additional Resources need to be applied as effective as possible moving forward and in your opinion secretary norquist where will how long will it be realistically where the dod will be in a position where the artist will be clean on this. I look forward to working with the committee with your leadership with the department to make good on this promise made so long ago to the taxpayers in every aspect of the federal government would learn from the audit for continuous improvement. C thank you senator kaine and secretary thanks again for being here. We look towards your Opening Statement and if you want a longer writtenr statement that will be available. Soon i chairman sewell been Ranking Member can distinguish members of the committee thank you for the opportunity to testify before you today on the department of defense Financial Statement not appear their three major questions about the audit would like to briefly address. First why even have an audit . Second what is thest result of this years audit and third how does the audit and other reforms benefit american taxpayers . The short answer is in extraordinarily large andef complex organization. We employ 3 million servicemembers while it a typicl airline manages between 131600 aircraft or the military services approximately 16,000 aircraft. We manage 290 and 92 billion inventory more than six times the size of the walmart the Worlds Largest retail company. We effectively assess complex operations. A Financial Statement not at his comprehensive and includes verifying accounts locations ano conditions of our military equipmentau property material ad supplies. It has vulnerabilities in her Security System and invalidates the accuracies of action such as promotions and separations. In short it provides independent feedback to dod leadership up with the following results. Can you than with last year they reported no evidence of fraud no significant issues to military and civilian members and could account to the existence and completeness of Major Military equipment. In addition one organization received a clean opinion the defense, sterry agents onell seven of the 24 will have an unmodified opinion this year. Of the 2000. In 77 findings in fy2018 the department was successful in closing more than 50050 or 23 of their findings. It demonstrates progress but we have a lot more to do. How does the audit benefit the american taxpayer . Original on primary purpose of the outage is transparency but we have seen how the audit saves money by improving Inventory Management identifying vulnerabilities in cybersecurity and providing better data for decisionmaking. Let me give two examples to the navy at in jacksonville conductedde an assessment identified 81 million worth of active material not tracked in the Inventory System that was now available for Immediate Use increasing maintenance time and building 174 requisitions. Unneeded equipment freeing up 200,000 square feet equivalent of 4. 6 acres. We are reducing the benefits of better data and f the use of daa analytics. For example the department uses the advanta told to automate the quarterly review process of its obligations. This workload to promote it efficiency timber bided analysts the time and insight they need to identify. And 60 million highrisk funds moving them from the low priorities function to better use before they cancel or expire. The audit is a foundational element with a broader landscape of business reform and the National Defense strategy. We are moving forward on multiple fronts to improving your enterprise buying power and consolidating i. T. Realigning and reforming health care consistent with congressional direction reforming how we do back in investigations to make more effective and less expensive than eliminating duplicates in an efficient Business Systems as well as identifying inefficiencies in the a what we like to call the fourth estate. Id remiss if i didntt mention the harmful impacts of them going into the resolution and i recognize that im preaching to the choir but the Department White house expect the urgent need for congress to pass the fy2020 authorization and appropriation bill. This ear stopgap measures are wasteful to the taxpayer. The delay storm damage repairs and again to military is made of readiness and modernization. Ultimately a cr is good for the enemy not for the men or women of the u. S. Military. The administration came to agreement as quickly as possible consistent with the budget deal reached this summer. In closing id like to thank President Trump for his leadership in the dod work force for facing this complex and importantre issued and id Like Congress and this committee and particularly Committee Staff for your commitment to this massive undertaking and making annual financial audits a regular way of doing business. The department of defense is one of the most complex enterprises in the world in partnership with this congress we must continually improve our Business Practices in order to reduce costs and maintain our competitive edge. Each of us asked their tax. To be as responsible and spending their money as they were in earning it. It thank you mr. Secretary. Let me begin with the basic questions and im not sure you have the answers since youve onlym been in the comptroller position for a couple of years but from your s perspective why would the pentagon never audit you . You would think as you mentioned how important it is to the country, how large it is how complex it is. Thats the federal agency you do want. Why was this the first time that somebody undertook this daunting task and again i commend you for doing it. Say that thank you mr. Chairman. Thek pentagon has mobilized. We have the gao and eiji and others would they do program on its this particular subject. The difference of the Financial Statementhe is an endtoend the audit on the dramatic scale. What you just said twice. What we just did twice. That thats never happened before. Why . A couple of reasons. Its an extremely hardwh task. They did one in world war ii for example. Say that the challenge with the audit is there was an emphasis on trying to get ready for and this is where i run a fundamentally different view. They said its too expensive. Lets get ourselves ready enough that wee can pass the audit and bring the auditors then. My experience with Homeland Security where they were under audit is that was a major mistake. Homeland security didnt have a choice. I found the auditors in their feedback to be the central piece of getting us to that clean opinion so my view is the money we pay the auditors with all the other money we are spending are going to things and we are getting feedback on whether they were successful. Evenng though the Defense Department is spending money they had no audit a slang to tell you ifhe they were better from one year to the next. We areh carefully measuring thoe items precisely for that purpose and thatss the biggest difference but i believe the auditors are the key steps in getting us to the opinion not something you bring to them. Let me go into a little bit more. The audit do cost a lot of money think the fy19 audit costs close to a billion dollars. If we are doing this annually which is your goal, correct . Yes. Sample this pay for itself or his already paying for itself . Before we started the audit the department was spending 770 million to fix problems. With the oddities at 195 or for 200 million in external audits. We know from from the experience of engineers when they went from no opinion to lean opinion their audit costs dropped in half. That will come down as we move towards tests and controls. Thats a level of funding necessary for transparency. 200 milliones is one 30th of 1 of our budget to be held accountable. We have to spend money and dod to support that. Those numbers will come down as well. The big number of a half a billion dollars is inrt mediatin and the question there is can you have fixed . In the absence of an audit its very the things i learned in my prior job is fixing problem isnt a reliable indicator. I was depending on the editors confirming that people have fixed in onene of the best thins that hoosiers show us is the editor greets with all 10. Ive got some training i need to do and some people i need to talk to. Thats not going to get them success. You cant wait until the end of the process. You need the auditor doing that on a continual basis. We have seen the benefits and savings and return on investment that i know not expected to see this early long before he got to the point where expected the east to comein down. I can go on more about it. With me ask another basic question. For those of us who are not auditors would exactly does this entail . You are going through through installations near people fanning out over all of our military bases going to supply depots. What exactly are they doing . They are not counting every rifle and every tank or are they . They cant because the sure labor that would be involved as a problem. They will go up to the highest level of the organization and look into their databases and say show me everything you think you own and havent use. They start there and then they pull samples from that and follow it all the way down to the installation. If they went to for planar they went to anniston. I need to see not just a tank i need to see this tank with the serial number that supposed to be here. And is it in working condition . Do you have proof of ownership . Is a were supposed to be . They walked or took those and they look around the base and they find a series of items and they go the other direction. Show us that you at the Department Level have them in your system. It goes one direction and then it comes the other what they are looking for is examples of a breakdown for the summary is not equal to the parts. Then i do the same thing with you paid somebody a certain amount. You have the records to back that up quick you have the paperwork to support that and can you produce it in a timely manner . That the process you go through. Its the standards that will be helpful. Thank you mr. Speaker terry. Im glad youre here to testify and hopefully we are all going to learn from this and most importantly the pentagon is as well. Senator kaine. Mr. Secretary and good to start with the question not based on the audit but your role as assistant sec or terry, officials in the pentagon that was supported proud to support your nomination. They are been a number of articles that have come out with headlines as examples. Business insider quote dermis prepare to move the tune colonel Alexander Vindman and his family to a safe location if necessary. Reuters army assessing impeachments witnessed vindman you a sick official duties articles were based on reporting done by the wall street journal. Lieutenant colonel vindman is a virginia resident like you are. Lieutenant colonel vindman is a patriotic american like you are pretty much going to ask you what you think its appropriate to attack his loyalty, his patriotism is judgment or his characterpr because i know how u think about it and nine not owing to ask you what you think its okay to use the White House Social Media counter other white house assets to amplify such an attack. In your role as deputy secretary of defense we make sure that members of the military are not punished for face reprisals for corporate in with congress. We take very seriously our responsibility to the response congress. We take individuals on personal security very personally and we expect people to be responsive and truthful for that and i would urge you at this particular time to be varied protecting members of our military if their corporate in with congress. It inc. Your words delivered here should hopefully give some assurance in some confidence to some who are very worried. T

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