[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 112-73]
IS THE FINANCIAL MANAGEMENT
WORKFORCE POSITIONED TO ACHIEVE
DOD'S FINANCIAL IMPROVEMENT GOALS?
__________
HEARING
BEFORE THE
PANEL ON DEFENSE FINANCIAL MANAGEMENT
AND AUDITABILITY REFORM
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
HEARING HELD
OCTOBER 6, 2011
[GRAPHIC] [TIFF OMITTED] CONGRESS.#13
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PANEL ON DEFENSE FINANCIAL MANAGEMENT
AND AUDITABILITY REFORM
K. MICHAEL CONAWAY, Texas, Chairman
SCOTT RIGELL, Virginia ROBERT ANDREWS, New Jersey
STEVEN PALAZZO, Mississippi JOE COURTNEY, Connecticut
TODD YOUNG, Indiana TIM RYAN, Ohio
Paul Foderaro, Professional Staff Member
William Johnson, Professional Staff Member
Lauren Hauhn, Research Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2011
Page
Hearing:
Thursday, October 6, 2011, Is the Financial Management Workforce
Positioned To Achieve DOD's Financial Improvement Goals?....... 1
Appendix:
Thursday, October 6, 2011........................................ 23
----------
THURSDAY, OCTOBER 6, 2011
IS THE FINANCIAL MANAGEMENT WORKFORCE POSITIONED TO ACHIEVE DOD'S
FINANCIAL IMPROVEMENT GOALS?
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Andrews, Hon. Robert, a Representative from New Jersey, Ranking
Member, Panel on Defense Financial Management and Auditability
Reform......................................................... 2
Conaway, Hon. K. Michael, a Representative from Texas, Chairman,
Panel on Defense Financial Management and Auditability Reform.. 1
WITNESSES
Commons, Hon. Gladys J., Assistant Secretary of the Navy
(Financial Management and Comptroller), Department of the Navy. 6
Gregory, Sandra A., Special Assistant to the Under Secretary of
Defense (Comptroller), Office of Financial Workforce
Management, U.S. Department of Defense......................... 3
Matiella, Hon. Mary Sally, Assistant Secretary of the Army
(Financial Management and Comptroller), Department of the Army. 5
Morin, Hon. Jamie M., Assistant Secretary of the Air Force
(Financial Management and Comptroller), Department of the Air
Force.......................................................... 8
APPENDIX
Prepared Statements:
Commons, Hon. Gladys J....................................... 46
Conaway, Hon. K. Michael..................................... 27
Gregory, Sandra A............................................ 31
Matiella, Hon. Mary Sally.................................... 40
Morin, Hon. Jamie M.......................................... 51
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
Mr. Andrews.................................................. 62
Mr. Palazzo.................................................. 61
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
IS THE FINANCIAL MANAGEMENT WORKFORCE POSITIONED TO ACHIEVE DOD'S
FINANCIAL IMPROVEMENT GOALS?
----------
House of Representatives,
Committee on Armed Services,
Panel on Defense Financial Management and Auditability
Reform,
Washington, DC, Thursday, October 6, 2011.
The panel met, pursuant to call, at 8:00 a.m. in room 2212,
Rayburn House Office Building, Hon. K. Michael Conaway
(chairman of the panel) presiding.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
FROM TEXAS, CHAIRMAN, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND
AUDITABILITY REFORM
Mr. Conaway. Welcome, everyone, to our hearing this morning
on DOD's [Department of Defense] workforce efforts and
management. I would like to welcome everybody to today's
hearing, entitled ``Is the Financial Management Workforce
Positioned To Achieve DOD's Financial Improvement Goals?''
The panel's past hearings have included examining the
implementation of financial improvement and audit readiness
strategy and methodology, the organizations that play a key
role in DOD's ability to improve financial management such as
the Defense Finance and Accounting Service, and DOD's payment
and funds control process.
One thing that has been readily apparent from these
hearings is the importance of a well-qualified, well-trained
financial management workforce. For example, at our last
hearing the Department of Defense Office of IG [Inspector
General] noted that inadequate training was one of the factors
that contributed to potential Antideficiency Act violations.
The financial management workforce ranges from accountants
to auditors to financial analysts, and is made up of both
civilian employees and military personnel. All of these groups
are critical to DOD's financial improvement efforts. The
financial management workforce needs to effectively perform
financial and budgetary accounting, and follow proper internal
control procedures as they execute their work. If there are
gaps between the competencies required to perform these
functions and current capabilities, they should be, and must
be, identified and corrective actions taken.
In addition, due to the constrained fiscal environment, it
is imperative that the Department of Defense effectively manage
its workforce, including ensuring the right skills mix in order
to achieve improved financial management.
I think a workforce with the adequate and appropriate
skills is especially important as DOD moves to enterprise
resource planning systems. It is essential that the users of
these systems understand the capabilities of the systems and
receive the proper training on how to use them in performing
their day-to-day operations.
One thing is clear. You can develop plans to improve
financial management, implement new financial systems, and
refine business processes. But without a well-staffed, well-
trained and skilled workforce you will not achieve success.
I want to thank our witnesses in advance for their
testimony and agreeing to be with us again, three of them. We
have today Ms. Sandra Gregory, special assistant to the Under
Secretary of Defense, Comptroller, Office of Financial
Management; the Honorable Mary Sally Matiella, Assistant
Secretary of the Army, Financial Management Comptroller; the
Honorable Gladys J. Commons, also Assistant Secretary to the
Navy, Financial Management Comptroller; and the Honorable Jamie
M. Morin, Assistant Secretary of the Air Force, Financial
Management Comptroller.
Welcome all four of you this morning. And now Rob, if you
have got some remarks before we turn to the witnesses?
[The prepared statement of Mr. Conaway can be found in the
Appendix on page 27.]
STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM NEW
JERSEY, RANKING MEMBER, PANEL ON DEFENSE FINANCIAL MANAGEMENT
AND AUDITABILITY REFORM
Mr. Andrews. Good morning, Mr. Chairman. Good morning
ladies, and gentleman. It is nice to see all of you here this
morning, many returnees. That is very brave of you.
[Laughter.]
Chairman McKeon, I think, is performing a significant
national service at the full committee level by conducting a
very rigorous discussion of the consequences of the fiscal
choices in front of the Department of Defense.
It appears that, under any circumstances, we would be
looking at reductions in the neighborhood of $360 billion over
10 years at a minimum, and perhaps reductions of far in excess
of that, as many as $950 billion or a trillion dollars over 10
years.
There are strongly held opinions about whether that is
right or wrong. There are strongly held opinions about whether
to do that or not. And I think the chairman deserves credit, a
lot of credit, for focusing the committee, and the country
hopefully, on that discussion.
Our panel's work, which our chairman has done so well, is
integral to having an intelligent discussion about those policy
choices. You can't decide where to allocate your resources if
you don't know where they are going already and where there
might be ways to reallocate existing resources to achieve the
mission of the organization.
So that the production of financial statements is central
to this entire discussion taking place on a rational basis, and
our panel chairman is pretty much solely responsible for
putting us in a position where we are going to have those. His
work, and the statute that we wrote last year, is the reason
why these statements are going to happen by 2017.
Having said that, he and I are both--and other members of
the panel are very impatient. We understand 2017 is the outside
date. We would like progress well before that. And this morning
we are going to talk about the thread that, if it is pulled out
of that tapestry, makes the whole thing fall apart.
As the chairman said, we can have all the enterprise
management systems--I always get that term wrong, excuse me--
yes, we can have all the systems that we want, all the software
we want, all the plans that we want. If we don't have the right
people, if we can't recruit and retain the right people, this
is not going to work. So I am very interested this morning in
hearing what the panelists think, not only about recruitment of
the best and the brightest but, in some cases more importantly,
retention.
A recurring problem throughout the Department of Defense,
both in the uniform and non-uniform sector, has been that we do
a very good job attracting bright people to come to the uniform
service and the civilian service, and then we don't keep them
as well as we should.
We invest a lot in their education, their training, their
development, and we don't keep them as well as we should. So I
am interested in hearing, you know, how we can get the best
graduates of the Wharton School, to name one, to come to the
Department and stay there so that they can do this kind of work
as part of their national mission.
So I am glad to be here this morning. I look forward to
hearing from you ladies and gentleman. I thank the chairman for
having the hearing.
Mr. Conaway. Thank the gentleman for his kind words.
Ms. Gregory, for your opening statement.
STATEMENT OF SANDRA A. GREGORY, SPECIAL ASSISTANT TO THE UNDER
SECRETARY OF DEFENSE (COMPTROLLER), OFFICE OF FINANCIAL
WORKFORCE MANAGEMENT, U.S. DEPARTMENT OF DEFENSE
Ms. Gregory. Chairman Conaway, Ranking Member Andrews,
members of the panel, thank you for the opportunity to testify
today concerning the Department of Defense financial management
workforce. I submitted a statement for the record, which I will
summarize briefly.
With more than 33 years of DOD financial management
experience, I continue to serve with a dedicated, skilled
financial workforce that is seriously mindful of its
stewardship role. As the functional committee manager for the
DOD financial management community, I am responsible for
compliance with overarching DOD civilian human capital strategy
plan that is lead by the Under Secretary of Defense for
personnel and readiness.
Our goal is to make a good workforce better, and to get the
right people trained at the right job, for today and for the
future. In concert with the Department's human capital plans,
we recently took steps to establish a course-based
certification program designed to provide a framework and as a
way to promote certain types of education, including a focus on
auditability for defense financial managers.
This program will focus on critical areas to include
achieving department-wide auditability, sharpening analytics,
and increasing overall accountability. The proposed DOD
Financial Management Certification Program, will be similar to
the program for the Defense Acquisition Workforce.
The House and Senate Armed Services Committees have
provided legal authority for the new program in their fiscal
year 2012 authorization bills. And as Congress works through
the legislative process, we are laying the groundwork now so we
will be ready to implement the program once the Authorization
Act is finalized.
Our effort is currently focused on five areas. First, to
map existing Department of Defense courses to competencies. The
DOD Financial Management Certification Program is based on
financial management enterprise-wide competencies. The DOD
portfolio of financial management training and professional
development courses will be aligned to these competencies.
This alignment will aid in building a standard body of DOD
financial management knowledge and in elevating shared
competencies, with a renewed emphasis in analytics, decision
support and audit readiness.
Second, we are focusing on test-based certification. The
Department has identified 20 professional test-based
certifications for areas such as accounting, auditing, cost and
financial management.
Third, we are concerned with the range of experience in our
financial management professionals. The certification program
will require not only specific DOD financial management
experience at different levels, but it will also require
experience in different types of assignments.
Fourth, considering that our personnel are scattered
throughout DOD and its many locations, we are sensitive to the
need for communications and marketing. An aggressive and
comprehensive communications and marketing campaign in terms of
briefings, Web-based articles, and educational material is
crucial to inform and educate the workforce prior and during
implementation.
And fifth, we are aware of the need for a certification
program support, and oversight will be required at various
levels throughout DOD to administer the program. DOD's efforts
are focused on deliberate, professional workforce development,
ensuring that the financial management community has a broad,
enterprise-wide perspective and a standard body of knowledge
throughout the Department.
We are focused on making a good DOD financial workforce
even better as we march toward that 2017 goal of obtaining a
clean audit opinion. In summary, the Department recognizes the
importance of maintaining a capable workforce to improve
financial management in DOD, and especially with respect to
better analysis, audit readiness, and increased accountability
for all who are entrusted with the taxpayers' money.
We appreciate the support of both the House and Senate
Armed Services Committees, and they have provided needed legal
authority in their authorization bills for the Financial
Management Certification Program. And we will work with the
House and the Senate on final language for the fiscal year 2012
NDAA [National Defense Authorization Act].
So I appreciate the time you and your distinguished panel
have devoted to financial management workforce issues. I look
forward to your questions.
And, Mr. Chairman, this concludes my statement.
[The prepared statement of Ms. Gregory can be found in the
Appendix on page 31.]
Mr. Conaway. Thank you, Ms. Gregory.
Ms. Matiella.
STATEMENT OF HON. MARY SALLY MATIELLA, ASSISTANT SECRETARY OF
THE ARMY (FINANCIAL MANAGEMENT AND COMPTROLLER), DEPARTMENT OF
THE ARMY
Secretary Matiella. Chairman Conaway, Representative
Andrews, and members of the panel, thank you for the
opportunity to testify today regarding the Army's financial
management workforce. Secretary McHugh, Chief of Staff Odierno
and Under Secretary Westphal, our Chief Management Officer, and
all of our senior leaders appreciate the criticality of
establishing and retaining a qualified workforce--a workforce
which will enable the Army to be audit-ready by September 30,
2017.
The Army employs hardworking soldiers and civilian
personnel across all functional areas who are committed to
improving our business processes and supporting our
warfighters. However, the systems and processes that we are
improving require the implementation and execution of different
processes and different practices.
By requiring our workforce to adjust to different systems,
practices, and controls, my peers and I must fulfill our
obligation to train them and to provide sufficient resources to
train them successfully. The Army has a well-deserved
reputation for training our soldiers as the best warfighters in
the world. We are working toward supporting our warfighters
with the best financial management workforce in the world.
In fact, the Chief of Staff of the Army and the CMO [Chief
Management Officer] of the Army recently initiated an Army-wide
workforce capability assessment to obtain a better
understanding of the Army's functional capabilities to identify
potential workforce redundancies and gaps, and to establish an
actionable plan to improve the workforce. We are connecting the
outcomes of that workforce review to the deployment of our new
business systems, thus creating a more efficient and effective
tail that supports the tooth of the Army.
In addition to these critical workforce assessments, we are
undergoing annual audit examinations by an independent public
accounting firm each year from fiscal year 2011 to 2014. These
audit examinations will serve to condition the Army on how to
support financial statement audits and to ensure that our audit
readiness strategy is sound and remains on schedule.
By repeating this cycle of assessing, testing, identifying
deficiencies, and implementing corrective action, we are
providing our workforce with hands-on, real-life audit
readiness experience and training. We believe that this
experience with audit examinations will supplement our
instructor-led training courses on systems, internal controls,
and corrective action implementation.
While my office is guiding the Army's audit readiness
efforts, it is important to note that establishing and
maintaining an auditable business environment depends heavily
on business process owners outside of financial management or
the comptroller field. Fortunately Secretary McHugh appreciates
the fact, and is holding senior executives across all
businesses accountable for supporting the Army's audit
readiness goals.
I am working with my counterparts in logistics, manpower,
and others to ensure that they understand our requirements and
provide us appropriate support to meet this shared mission. It
is extremely important that our business partners interface
auditable data into our accounting system. That is, that their
systems, processes, data, and controls also pass audit
scrutiny.
I am confident that we will be audit-ready by September 30,
2017, because we have a sound and resource financial
improvement plan that relies heavily on providing the
appropriate training and resources for the Army soldiers and
civilians, and also holds them accountable for enabling an
auditable environment.
Secretary McHugh, Chief of Staff Odierno, and Secretary
Westphal are all committed, as I am, to improving our financial
processes, conducting workforce analysis, and restructuring and
training our financial workforce to meet audit standards.
Developing the most capable workforce is the right thing to do
for the Army, our Federal Government, and the men and women
defending our Nation.
I look forward to continued collaboration with the members
of the panel, our counterparts in the Senate, GAO [Government
Accountability Office], and Secretary Hale to ensure the Army's
workforce obtains and retains the appropriate skills,
certifications, and experience to meet our stewardship
responsibilities.
I look forward to your questions.
[The prepared statement of Secretary Matiella can be found
in the Appendix on page 40.]
Mr. Conaway. Thank you, ma'am. Ms. Commons.
STATEMENT OF HON. GLADYS J. COMMONS, ASSISTANT SECRETARY OF THE
NAVY (FINANCIAL MANAGEMENT AND COMPTROLLER), DEPARTMENT OF THE
NAVY
Secretary Commons. Good morning, Chairman Conaway,
Congressman Andrews, members of the panel. Thank you for the
opportunity to discuss the Department's financial management
workforce.
The financial management workforce is a professional and
well-trained team of 9,000-plus civilian and military
personnel. Today, I specifically focus on personnel classified
in the general schedule 500 series--our financial managers,
accountants, auditors, financial technicians, and our military
financial managers.
Our first responsibility is to the warfighter. We need to
effectively obtain the financial resources to meet the
warfighters' needs by developing supportable budgets, budget
strategies, and justification. We want to ensure that we get
the most capability for every dollar we spend and can
accurately account for those expenditures. Achieving auditable
financial statements will assure you, the warfighter, and the
taxpayers that we take this responsibility seriously.
For many years, we have had a very strong budget
formulation and execution team. With the establishment of the
Defense Finance and Accounting Service in the 1990s, most of
our accounting expertise was transferred to that organization.
While we divested the day-to-day accounting operation, we
retained fiduciary responsibility.
As we tried to improve financial management and move toward
auditability, we recognize that we could no longer afford
stovepipe positions or narrow skill sets. To be effective and
efficient, our workforce needed a broad level of understanding
of the full range of the Department's financial management and
fiduciary responsibilities.
In 2006, we took steps to broaden the scope and
responsibilities of our professional and technician workforce.
As a follow-on, we provided career road maps to guide the
education, training, and experience required by our workforce
at all levels--entry, journeyman and expert. Today, we provide
a range of opportunities from online training courses,
classroom training to an Executive Master's of Business
Administration taught by the Naval Postgraduate School. We also
have a fellowship program allowing full-time attendance at a
graduate school or a career-broadening job assignment.
However, we know that we have some skills and knowledge
gaps, particularly in the area of audit readiness. To
specifically address those gaps, we asked the Naval
Postgraduate School to develop an audit readiness course.
Starting this year, they will conduct a 3-day course to be
taught 10 to 12 times during the year at our major geographic
hubs. This will dovetail with the financial improvement and
audit readiness short course taught by the office of the
secretary of defense comptroller.
Of equal importance is having the right number and mix of
people to perform our financial management functions. Two years
ago, we took steps to beef up my own financial operation staff
to provide better oversight and guidance to our major commands,
and to ensure we were taking proper steps and priorities to
achieve financial audit readiness.
Currently, I believe the financial management workforce is
structured; civilians, military personnel, and contractor is
properly sized to achieve our goals. While I have addressed the
professionalism and training of our financial management
workforce, I recognize that there are many others who influence
the ability to achieve auditable financial statements.
As I noted in my last testimony before you, we are reaching
out to our general and flag officers, our senior executives,
and business process owners so that they understand the roles
and responsibilities that they play. We believe this will
cascade down throughout the workforce and support the
Department's efforts to achieve audit readiness.
Thank you for your interest in our workforce, and I look
forward to answering any questions you might have.
[The prepared statement of Secretary Commons can be found
in the Appendix on page 46.]
Mr. Conaway. Thank you, Ms. Commons.
Dr. Morin.
STATEMENT OF HON. JAMIE M. MORIN, ASSISTANT SECRETARY OF THE
AIR FORCE (FINANCIAL MANAGEMENT AND COMPTROLLER), DEPARTMENT OF
THE AIR FORCE
Secretary Morin. Mr. Chairman, members of the committee,
thank you again for an opportunity to testify here and to talk
about the Air Force financial management workforce--our
enlisted, our officers, our civilians. As the Air Force
comptroller, I view it as my responsibility to make sure that
the Air Force has the right workforce with the right skills and
the right training in order to help our secretary and our chief
of staff produce an Air Force that can fly, fight, and win for
the Nation. That is our ultimate goal.
At a time when our resources are very tight, it is all the
more important that we get the most out of our people. For the
Air Force, that means over 8,000 civilians in financial
management, over 900 officers, and almost 3,800 enlisted
members. Those are our Air Force financial managers, and it is
really only through their full contributions that we can get
the maximum combat capability out of each dollar that Congress
appropriates and entrusts to us. Strengthening that workforce
is a vital part of our effort.
I will say while this panel is obviously created to focus
on helping the Department of Defense get to audit readiness, as
my colleagues have mentioned, not every financial manager in
the Air Force is an accountant, not every financial manager in
the Air Force is a budget officer, and a clean audit is a means
to the end of better management of taxpayer resources. So I
think it is important to understand the depth and the breadth
of the Air Force financial management workforce.
We cover a wide range of activities. Cost analysts, as I
mentioned in previous testimony to this committee, are a key
part of the Air Force financial management workforce, as are
people doing program control and acquisition programs, as are
the budget team, and down to the folks working at a technical
level, processing military pay transactions. It is a broad
workforce that includes auditors, transaction processors,
planners, accountants, a whole range of activities.
The Air Force needs that diversified financial management
workforce in order to handle that full range of
responsibilities that really extend throughout the life of
appropriated funds, from initial development of a budget--a
program objective memorandum when our cost analysts have to
help us understand what we need in order to carry out our
mission in terms of dollars--through to financial systems
management and, ultimately, financial reporting.
I also, of course, want to mention that many of these
responsibilities have to occur in a deployed environment. Right
now, we have over 260 Air Force financial managers deployed
into harms way; again, doing a wide range of activities, from
taking care of pay and benefits issues for other deployed folks
all the way through budget building and cost analysis.
The workforce that we bring to bear on these challenges is
quite well-educated and skilled. Over 60 percent of the Air
Force financial management workforce holds a degree of some
sort, and 2,700 of those folks have master's degrees or above.
Now, that includes more than 100 of our enlisted troops who
have a master's. It is a well-educated workforce, and it is a
workforce that is committed to professional development.
We see a heavy focus on certifications, although there is
always room for improvement there. Looking just at my primary
headquarters-type audit readiness workforce and those directly
associated with them out in the field, that is a workforce of
about 80 people. And we have got 12 CPAs [certified public
accountants] in that group. We have got 15 certified defense
financial managers in that group, eight certified government
financial managers in that group.
It is a group that is well credentialed in terms of
education, training, and certification. But it is critical that
we continue to focus on getting that workforce the appropriate
skills, education, and training as we work towards audit
readiness. And some of the skills that they need to bring to
bear will change as we move to new systems, again as my
colleagues have alluded.
Our financial managers are learning how to use, and some of
the basic theory behind, the new enterprise resource planning
systems. It demands a different set of skills and a different
sort of attention to particular details than the prior systems
did. There is no question about that. Moving from what is
really a bookkeeping system to a true financial system that can
produce auditable financial statements requires changes at
every level.
And it will require us to more broadly focus our training
resources. We cannot identify just a tenth or a quarter of our
workforce and lavish training on them. We have got to reach,
really, 100 percent because weak links in the chain can break
the audit readiness effort.
We have had a particular focus on the pilot users of our
Defense Enterprise Accounting Management System, DEAMS, at
Scott Air Force Base, where we have had close relationships
with the program office and our functional management office to
ensure that the line-level users on that system get the
training they need, get the focused attention that they need,
as they really relearn their jobs. And it is not without
challenges, but it has been a productive handholding
relationship, with the users teaching the developers and the
developers and support teams teaching the users.
We are also working to restructure our enlisted curriculum
at our financial management schoolhouse, where we have moved
more commercial accounting standards into that training,
focusing less on teaching people how to use the legacy systems
and more on preparing for the future that they will operate in
for most of their careers.
Again, as we move from a traditional focus on manual
transaction processing towards more commercial accounting, more
cost analysis, more issues like that, we have got to prepare
the community. And we are leaning forward, and doing that.
Bottom line, we are keeping our focus on auditability while
we also work aggressively, strongly to support the warfighter
by providing that sort of world-class decision support through
a well-trained, well-educated financial management workforce.
As I have said before, I very much appreciate the
committee's engagement on this issue and in the broader issue
of financial management and DOD. It is helping us to be better,
and I thank you all for your focus on it.
[The prepared statement of Secretary Morin can be found in
the Appendix on page 51.]
Mr. Conaway. All right. Thank you very much. Appreciate
that.
This is probably the most straightforward area of the
entire process that we have been investigating as a panel.
Everybody understands a little bit about how this thing should
go forward, normally, as opposed to some of the more esoteric
things that are going on.
Ms. Matiella, you mentioned--and I think I heard in the
others--that your agencies have done, or your teams have done,
for lack of a better phrase, an inventory of what you have and
try to know where you want to get to.
Ms. Gregory, there are broader areas a lot of the folks out
there have. Can you talk to us about how you determine what you
have, what kind of skill sets you already have in place? Is it
a formal process to evaluate that?
What kind of attrition plan do you have in place for all of
that team? Because, you know, if everybody retires at the same
time that is not going to work, either. Can you visit with us,
each of you, about just how have you decided what you have in
place and where you are headed from there?
Ms. Gregory.
Ms. Gregory. Thank you, Mr. Chairman.
First of all, there are 48,000 civilians and approximately
10,000 military doing financial management across the
Department of Defense. And when we assess what we have in
conjunction with--I want to step back for a minute--the
required Strategic Human Capital Plan that we are working
with--because now, for the first time ever, the Department of
Defense at the department level has worked with all the
Services and components, defense agencies, to come up with
enterprise-wide competencies.
So when we issued the first report of the Strategic Human
Capital Plan, we did not have enterprise-wide competencies. The
Services in some of the large defense agencies had their own
separate competencies. So we will use it as a benchmark, now
that we have common competencies that we have been working on.
So then we will measure. As part of the Strategic Human
Capital Plan, we will be using those competencies to measure
and find out what specific gaps we have. So right now we have
identified broad gaps, for instance such as analytics and in
the area of audit readiness.
And so as we continue to have more specifics we will be
able to use those competencies that we have developed at five
different levels. We use the OPM [Office of Personnel and
Management] methodology of developing five different levels
within each competencies. We have over 23 competencies
throughout that are applied to all the different occupational
series in the 500 financial management civilian series.
So when you say how we look at the workforce, once a
quarter, Mr. Hale, the Under Secretary of Defense, looks at
specific metrics throughout financial management. And there is
a section there on the financial workforce, to include the
aging of the workforce, how many years that we have been in the
workforce, how close we are to retirement.
And right now, our attrition rate is very low. The Federal
average, I believe, is around 8 percent. Ours is under 4
percent, and last year it was even a little bit lower than
that. So our retirements are down, our attrition is down. And,
of course, the economy is driving a lot of that.
Now having said that, I will talk for one of the large
defense agencies, Defense Contract Audit Agency. Because they
have been one of the areas that have brought on around 500 new
auditors in their specific area. And I just met with some of
them at our new Defense Civilian Emerging Leadership program,
which you authorized back in fiscal year 2010 NDAA to work also
on the leadership aspect of it.
So what is interesting is, I met folks who, just to your
earlier point, we are attracting at this point in time. We are
attracting accountants and auditors who have graduate degrees
from Yale and Columbia. And also I met some from here in George
Washington. So those are a small sample size, but we are able
to attract that. We will have to continue to work at what tools
we have available; that when the economy picks up that they
will be tempted, perhaps some of the folks, to leave and go the
other way.
We are also very much aware that the younger workforce may
not have the same ideals as some of the earlier folks who came
in, that they will probably weave back and forth throughout
Federal Government and go to the private sector and come back.
So we are very much attuned to that. Like I said, we look at
the statistics, we look at what tools we have available, and
are using them.
Secretary Morin. Yes, sir. On the Air Force side, I would
say that we do have, as do, I think, pretty much all areas of
the Federal Government, medium-to long-term concerns about the
health of the workforce as we go through a wave of retirements.
A very substantial share of the Air Force financial management
workforce is at or approaching retirement age, with really
about a third in the, you know, age 55-plus category.
That provides us a wealth of experience and it is a
tremendous asset but, obviously, people will not remain in the
workforce forever. And so we have to keep looking forward. As
General Gregory said, the retention right now is very good for
a variety of reasons, but we have to look aggressively forward.
I will say one interesting nuance in the workforce that
makes a real difference in the Air Force, and probably for the
other Services. As you know, several years ago Congress changed
the law and allowed dual compensation so that retired military
personnel could also collect a Federal civilian salary without
an offset.
And since then, there has been a substantial increase in
the number of retired military, as well as other prior service
military, in our civilian workforce. It is for the Air Force,
over 1,500 of our financial management workforce is retired
military.
So they may have a lower number of years of Federal service
as a civilian, yet a little bit older. There are huge
advantages with keeping those people on and taking advantage of
the skills they bring. It also means you get maybe fewer years
of civilian service out of them, and it requires more
transition planning, as well. But we do have those issues in
front of us, certainly.
Secretary Commons. I believe that our workforce is properly
sized and that we have the right people, we have the right
skill mix. So I will focus my attention on how we replenish
that workforce. And we allow our local commands to hire,
basically. But we have two centrally managed programs that we
do at my level--the financial management intern program, where
we bring college students in that have a 3.5 or better grade
point average. We do that recruiting every single year. We go
out to universities.
We actively recruit people to come in at the 5/7 [GS-5/7]
level, and that has been very effective over the years. We also
have an associate program that we centrally manage, where we
bring in midlevel employees that have experience either in the
private sector. They must have a degree. We try to recruit
those with advanced degrees.
So we feel that we are taking action so that if we should
have retirements, as has been stated, the economy allows us to
retain people right now. But we actively recruit to replace our
personnel specifically in those two programs.
Secretary Matiella. We are looking forward. The Army is
going to have a fully-deployed, compliant accounting system by
next year. And so this new system is much more integrated, has
a lot more edits involved in it. So because of the edits,
because of its integration, because of its complexity and
sophistication we are going to need more analysts versus
accounting technicians.
Right now there are a substantial amount of accounting
technicians and budget technicians that are working in our
legacy systems. Looking forward, our recruitment strategy is to
get more accountants, more budget analysts, folks who know how
to apply analytics to the data.
There is going to be less input required by the system
because that is going to be coming in from our feeder systems,
and there is going to be more of a requirement to look at
anomalies, should they exist. And so looking forward, we are
looking at our skill set and the requirement to recruit those
college graduates who are able to do the analytics that are
going to be required by a new system.
Mr. Conaway. Thank you.
Mr. Andrews.
Mr. Andrews. Thank you Mr. Chairman. I again thank the
witnesses for their preparation.
Ms. Gregory, you talked about the 20 professional test-
based certifications for personnel that you are working on.
I note that it was the fiscal year 2002 NDAA that gave the
Department the legal authority to pay for and support
certification and credential standards. Where are we, in terms
of how many of those 20 are ready to be fielded and start
giving tests to people?
Ms. Gregory. Thank you, Mr. Andrews. First of all, since
you gave us that authority we have been reimbursing civilians
and military for the exams they that take for certifications.
The 20 test-based certifications are those that are already out
there, like CPA's, certified management accountants, certified
defense financial managers, et cetera. And they are also in the
cost area, and in audit and finance.
But we last year, for instance, reimbursed about $700,000
and the year before about $800,000 for the reimbursements. So
the 20 that I mentioned are part of the entire--we are calling
it the certification program, similar to the Defense
Acquisition Workforce Certification program. There will be
levels one, two and three so that getting a test-based
certification will be a part of that.
Mr. Andrews. Are these tests that the Department is going
to generate itself and give to employees, or some outside
organization?
Ms. Gregory. No. All the 20 are all outside organizations.
So our certification will have that as a part of it to give
it----
Mr. Andrews. When we reimburse the employee to prepare for
that certification, is there any contractual obligation for the
employee to stay for a certain number of years after they pass
it?
Ms. Gregory. I can check, but right now I believe not.
Mr. Andrews. Do you think there should be, or should not
be?
Ms. Gregory. It would be dependent on--for instance, a lot
of them are getting certifications are staying with us. They
are not just taking them and leaving. But we can check into
that and see what the percentage is.
[The information referred to can be found in the Appendix
on page 62.]
Mr. Andrews. I do not have any bias to asking that
question. I would like to know your opinion because I do not
know what the right answer is.
Ms. Gregory. For instance----
Mr. Andrews. We certainly do not want to create
disincentives for people to get the certification and tie them
up. But, on the other hand, we do not want somebody to get
trained on our dime and leave.
Ms. Gregory. But, for instance, the certification for
Certified Defense Financial Manager, which is a frequent one
that they receive, is only $95.00 a module, or for all three
modules is $285.00 per person. So it is a small dime on that
one. Now, if you are getting a CPA it would be more than that.
Mr. Andrews. Obviously.
Secretary Commons, you describe this technician that used
to process vouchers and now we call him or her a financial
technician. What is the difference, in terms of their
responsibilities and their compensation? If I were one of these
folks previously, what did I do and how much money did I make?
And now what do I do and how much money do I make?
Secretary Commons. Normally, the focus before would be very
specific. For example, you may be a military pay clerk or you
may just pull vouchers. Now, what we have said to them is, you
need to understand more about the entire process. As to being
so narrowly focused so that you only understand military pay
and how that functions, you need to understand civilian pay.
You need to understand contract vendor pay, and how that
process works. So what we did was to try to broaden their skill
level so that we could better use them instead of just----
Mr. Andrews. Have them play positions, not just second base
or not just right field?
Secretary Commons. Yes.
Mr. Andrews. Do you make more money if you can play more
positions? Do you pay them more?
Secretary Commons. Well, experience, and you are able to
move up. You are able to move into positions that would pay you
more because your skill set is not so narrow that you can only
apply for positions in one particular area.
Mr. Andrews. Gives you more paths to advance your career
than----
Secretary Commons. Yes.
Mr. Andrews. Secretary Matiella, do you have any estimate
on how much the Department of the Army spends a year to train
people in the financial field?
Secretary Matiella. I cannot give you a figure right now. I
will have to get back with you on that.
Mr. Andrews. I would be interested, I think the committee
would be interested, in seeing that. And then----
Secretary Matiella. Right.
Mr. Andrews [continuing]. We would like to know whether
that figure has gone up or down.
Secretary Matiella. Right.
Mr. Andrews. And then what metrics you use to measure how
effective you think the training has been.
Secretary Matiella. Exactly. We do have quite a very large
training program. It goes all the way from providing graduate
education to providing week-long or hours-long cost training.
But I will get that information for you.
[The information referred to can be found in the Appendix
on page 62.]
Mr. Andrews. We would like to see that----
And then, Secretary Morin, the 40 senior audit personnel
that you are using at AFAA [Air Force Audit Agency], how are
those people selected? Who picked them, and on what basis?
Secretary Morin. Yes, sir. Those folks were selected by the
auditor general of the Air Force and his staff. We worked
closely--Mr. Ted Williams, who is from New York----
Mr. Andrews. Speaking of baseball, yes, I was going to say
``The Splendid Splinter.''
[Laughter.]
Secretary Morin. Yes. Unfortunately, Mr. Williams is a
Yankees fan.
Mr. Andrews. That is unfortunate on a lot of levels, yes,
but go ahead.
[Laughter.]
Secretary Morin. I have to restrain from comment. My wife
is also a Yankees fan.
Mr. Andrews. There is counseling for people like that.
[Laughter.]
Secretary Morin. The true challenge is, I am from Detroit.
Mr. Andrews. Uh-oh. Oh, you must have a very strained
household this week.
Secretary Morin. Mr. Williams and his staff identified
specific folks reporting to him, and also about 80 specific
auditors who were working in the field to support that effort.
We have a very collegial and collaborative relationship, but
you do need to maintain an appropriate level of independence
between----
Mr. Andrews. This is the final question. My time is up.
What skill level do those 40 senior people have that are
working at AFAA on the financial statement?
Secretary Morin. Virtually all of them have graduate
degrees and a substantial chunk of them are either CPAs or have
other audit certifications. I can get you the precise numbers--
--
[The information referred to can be found in the Appendix
on page 62.]
Mr. Andrews. Okay.
Secretary Morin. But it is a substantial chunk.
Mr. Andrews. Thank you very much.
Mr. Conaway. Thank you.
Mr. Young, 5 minutes.
Mr. Young. Thank you, Mr. Chairman. Thank you to all of our
witnesses for being here this morning.
Ms. Gregory, is your department supplementing its financial
management workforce with contractors? If so, can you give me a
sense of the extent to which you are doing that, how you make
those determinations, and what skill sets you are supplementing
the workforce in?
Ms. Gregory. I will speak primarily for a department-wide
view of it. Yes, we do have contractors, and we look at the
different skill sets that we need that we are missing. For
instance, audit readiness is probably the best example. That we
have a large portion of auditors because our organic auditors--
I should say accountants, not the auditors, the accountants--on
the organic side predominantly have been used to doing
budgetary accounting as opposed to proprietary accounting that
is now needed to have that skill set.
That is why we had to ramp up and use contractor support
from predominantly large accounting firms. Now, throughout, and
having been raised in financial management in the Department of
Defense for over 30 years, I have worked at every level and I
have watched us now, particularly since September 11, 2001,
when the defense budget went up dramatically, we did not
throughout--and I think we can say this for both Services and
the agencies--we did not go up proportionately in the staff
within financial management.
So when we had to, for instance, for tracking certain kinds
of money that came in, for instance for the global war on
terrorism, that oftentimes we did, on the budget side, hire
some contractors to do that.
Now with insourcing and the efficiencies, we have taken a
look at that--for instance, DFAS, when the insourced Defense
Financing and Accounting Service took several hundred
contracting positions and converted them into organic
positions.
Mr. Young. So it sounds like your long-term plan is to
bring a lot of that in-house as you get----
Ms. Gregory. Well, there is a balance. And so that we are
looking at, right now, what is the balance. And I think that we
have got it about right. That we will continue to need a lot of
contractor support for special projects that we might be
working on. Or, for instance, definitely for audit readiness we
have to have the contractor support.
Mr. Young. Okay. And for all of our witnesses here if you
have an answer to this, are you taking efforts pursuant to the
Efficiencies Initiative to actually reduce personnel in various
areas? It is something you may have touched on, but if you
could discuss that. If so, where are those areas where you are
reducing the number of personnel, and what impact is that
having on your workforce?
Secretary Matiella. With our new systems, the areas that we
are reducing personnel are on those personnel that are going to
be creating, you know, more transactional-level data; the
accounting technicians, the budget technicians. And we are
focusing on not growing our workforce.
So we are going to be left with those accountants, those
budget analysts that are able to do the analytics. So in the
long run, we see that our workforce will be reduced because our
systems will be able to do more and we will rely less on people
having to input.
Secretary Commons. We are not, at this time, planning any
reduction in the financial management workforce. Again we do
believe our workforce is right-sized at this point in time and
that we are moving forward. So I am not anticipating any
reductions. However I must tell you, in the current fiscal
environment everything is on the table so it does not mean that
I will not be subjected to some reduction in the financial
management workforce.
What I have done is to ask my major commands to let me know
if they are experiencing any significant reduction in the
financial management workforce so that we can take the
appropriate action.
Mr. Young. Where would you start if you were asked right
now? I mean, what would be the first? You have indicated you
are right-sized, but where would you begin to cut? Is that
something you have contemplated?
Secretary Commons. Not really because I think I have the
support of senior leaders----
Mr. Young. Okay.
Secretary Commons [continuing]. In that we are focused on
achieving an auditable financial statement. They support that,
they understand that we need to put the resources on to achieve
that. And so I am pretty confident that we can maintain the
workforce that we have.
Secretary Morin. Mr. Young, while our core audit readiness
workforce is growing and continues to grow, we are moving
forward on significant overhead efficiencies across the Air
Force. And financial management is by no means exempt from
that.
Across the staff that works for me, we have identified
already about 78 positions worth of efficiency reductions that
we can take, and we are pressing forward to implement those
now. Those are, as my colleagues alluded, primarily in
transaction processing-type activities, where increased
reliance on automated systems is helping us to do those more
efficiently.
Mr. Young. Thank you. Our time is up.
Mr. Conaway. Steve.
Mr. Palazzo. Well, good morning. Thank you all for being
here.
I have several questions. I am going to kind of jump around
a little bit. But my colleague here mentioned, he talked
about--or the insourcing for DFAS was brought up. Can you tell
me--I meant to ask this question last week, when the DFAS lady
was here--how many jobs were actually taken from contract and
insourced? And what was the motivation there?
Because typically, insourcing is, to me, frowned upon. I
think you know, if there is a business in the private sector
that can do it and do it better it should, you know, allow them
to deliver it to us. So just some of the methodology behind
what took us--if you can answer that, please, Ms. Gregory?
Ms. Gregory. We can get specifics from the DFAS, but I will
just give in general terms. There were several hundred
positions that were moved back in the insourcing. But the key
thing is, when there was an A-76 requirement to look at this,
when we study in anything that we outsource, there was always
that required by OMB Circular A-76, as you know. So they did
that, and then the dynamics have changed.
So I would be happy to get more in-depth if you would like
to have the specifics on DFAS, if you want to know the specific
number of people. Because I know Ms. Smith was here last week,
and I would prefer not to speak in the specifics of that. But I
know they did--it was more cost-effective than not to bring
them in.
So again, sometimes cost factors changed or the number of
people that they needed changed. So I would like to come back
and take that one for the record please.
[The information referred to can be found in the Appendix
on page 61.]
Mr. Palazzo. Okay. That is--anything you can provide my
office on that.
Now I guess in general--you know this might be outside the
scope, just peaked my curiosity--are there any major insourcing
efforts going on, DOD-wide, that you may know of? I remember
Secretary Gates saying something about in the middle of the
global war on terror that he was going to bring 10,000 people
back into the military.
Has that happened in the DOD civilian workforce? Has that
happened and, if so, what are the amounts we are looking at?
Ms. Gregory. I believe the Secretary had mentioned there
were 30,000 positions that we were going to insource, and I can
get back to you, too, on the specifics of that. I know that
effort was lead by an area outside of financial management to
keep track of it.
But I know that we also went through the efficiencies
drills that we are going through now from last year. So there
is a point there that we can get some more specifics on where
we are on that 30,000. But again, all the Department is
stressed on doing what is most cost-effective to still get the
mission done.
[The information referred to can be found in the Appendix
on page 61.]
Mr. Palazzo. Okay. I will not dominate the conversation
with insourcing, but do you all have a hiring preference for
veterans within the 48,000 workforce? Can you just--is it a
point-based system, or is it just subjective?
We will start over here. Sure.
Secretary Morin. Yes, sir, we follow the OPM hiring rules,
which include veterans' preference and a special preference for
disabled veterans.
Mr. Palazzo. So that is pretty much the same for everybody?
Secretary Morin. Yes sir.
Mr. Palazzo. Okay. If you are a CPA or CMA [Certified
Management Accountant], and you have gone above and beyond what
you need to do, and you are striving to be the best in your
field, is there a financial incentive to be a CPA within the
civilian workforce, or a CMA or, preferably, a CPA?
Secretary Matiella. I used to be a CPA and a civil servant,
and the incentive is that you become more promotable. When you
are competing with others for more responsible positions, I
think that it certainly helps. In terms of getting greater
salaries because you are a CPA, no, that is not the case.
Mr. Palazzo. Okay.
Secretary Matiella. Now you might get, because of your good
work, large amounts of award money for good performance. But
again, that is always tied into actual performance, not to the
fact that you have a certification.
Mr. Palazzo. Okay. You know, in the private sector if you,
you know, pass your CPA exam sometimes they will give you a
$1,500 or $2,500 bonus, just depending on, I guess, the level
of the firm. Within the military, there are 10,000 military
personnel that is involved in the DOD finance. How much is
officer and how much is enlisted? Is it a typical breakdown
that y'all know of?
Ms. Gregory. We can get that for you across the Department.
Right now, I just have it at the aggregate level. And that
includes Guard and Reserve, also, the 10,000 number. So we will
take that for the record and get that for you approximately. I
know, by the Services you have it probably have it broken down.
[The information referred to can be found in the Appendix
on page 61.]
Secretary Morin. Yes, ma'am. For the Air Force, I can tell
you we have about 900 officers and about 3,800 enlisted.
Mr. Palazzo. Do you feel like it is a problem attracting or
having qualified financial managers in the military side of it?
Ms. Gregory. You know, having been one for almost 30 years,
that in serving with the officers and enlisted on the financial
management side, they worked side-by-side, they had the skill
sets, they were well-trained. So it was a good melting. And, of
course, the civilians then usually offered more stability in
terms of like at the installation level in particular. That
they would have the long-term knowledge of organizations.
Mr. Palazzo. Okay. And just to wrap up, it sure would be
nice, you know, if you are a CPA in the civilian world and you
wanted to become--join the military--you know be treated like a
lawyer or a doctor or a chaplain and go from 01 to maybe an 02
or an 03 slot. Just a little incentive there to attract the
best and brightest.
Mr. Conaway. All right, thanks.
Scott.
Mr. Rigell. My colleague is a CPA. Good morning, everyone.
Thank you for being here. Appreciate what you are doing in
service to our country. And I am convinced and impressed and
grateful for the level of resolve that I see to accomplish the
mission. And I have no question that there is a firm commitment
to make sure that we are audit-ready and we achieve those
objectives.
I know what a challenge it is, certainly at a smaller
organization, to have everyone understand what the objective is
and then work toward accomplishing that. And with an
organization this large that, literally, is around the world
and as complex as the Pentagon, you know, it is a daunting
task.
But I do want to ask you, Ms. Gregory--I will direct it to
you, and if others are better suited to answer it, you can also
help here--but to what extent would--let us say someone who has
been with the accounting function here for six months or a year
or so be aware of, would understand and embrace, the audit
readiness objective in their department and really understand
how their department's contribution plays into the larger role?
I certainly know it is a challenge, but I do believe to the
extent that people understand where we are headed overall that
we are better off. And I will be asking, on our CODELS
[Congressional Delegations] going forward--and that is military
CODELS are essentially all I am doing, you know--I will be
asking mid-level managers, ``Are you aware of DOD's audit
readiness goals?''
I am going to push a little bit on that, and I hope to
comeback and say, ``Look, you are doing a great job on this.''
Could you comment briefly on that please?
Ms. Gregory. Thank you, Congressman. First of all, that is
the main impetus behind why we are leaning forward on this and
getting support from the House and the Senate, which we
appreciate. But when the under secretary said let us focus on
getting the whole workforce involved in audit readiness and the
importance of it. So at level one and level two and level three
we will go code every position just like the acquisition
workforce. And so we will have the appropriate level.
So, for instance, if you are a soldier coming in, or you
are GS-5, then there will be a program. And we are working
right now. Matter of fact, our office is physically located
with the Deputy CFO's [Chief Financial Officer] financial
improvement audit readiness. So every morning we see 60-some
people working on that.
And we are, right now, partnering with them to take the
courses that they have on financial improvement audit readiness
and put them online. And then we will also, then, continue
partnering with them for the appropriate level to have the more
difficult awareness of all the audit readiness.
So we are making them aware, putting it as part of the
mandatory part of the certification program. So it is one of
the main pillars and one of the main focuses.
Mr. Rigell. And they understand, I hope, how their
individual role contributes to the Department, which
contributes to this overall. Okay, I am encouraged by that, and
hope to come back in several months later on and tell you come
good stories about how that played out.
I want to follow up briefly on a theme that I was pursuing
at the last hearing. And that relates to the difficulty of
establishing a benchmark for an incoming senior executive,
whether it is a general or a captain, a colonel, for his or her
command, and establishing that benchmark so that they can be
accountable, then, 2 or 3 years later.
Secretary Commons, would you please comment on how a senior
executive or senior leader--we establish that benchmark so we
can know how they did a couple of years later?
Secretary Commons. Certainly. As I mentioned at our last
hearing, we did include a performance goal in each senior
executive's performance for the year. And so that will give us
a good base of did you actually accomplish what we asked you to
accomplish, or did you not?
For the flag general officers and our commanders, what we
did 2 years ago is, we actually wrote a plan for each of our
major organizations to say this is your contribution to our
financial improvement program. And what I had done was to have
it signed by the commander himself, by the commanding officer.
Previously, we had really put it down and had the
comptroller sign it. I thought that was not effective enough.
So I, in fact said, ``I need to have the commanding officers
signing this agreement so they understand exactly what they
have agreed to do, how they plan to improve the financial
management in their own organization.''
So that is the way we are trying to get it down to each
organization and make everybody accountable.
Mr. Rigell. Well, you are increasing the accountability. I
applaud that. Thank you so much.
I yield back.
Mr. Conaway. I thank the gentleman. Anyone else on the
panel have a second round? Okay.
A couple of this and that. The CPAs and others have annual
continuing professional education requirements and others. Do
you reimburse these employees for maintaining their
certificates, or their licenses?
Ms. Gregory. Yes, we do. And also as part of our DOD
certification program, although we are encouraging them to have
one of those 20 test-based certificates it is also going to be
that it is going to be mandatory that they have so many CPEs,
Continuing Professional Education credits. And that will be
part of the training budget that they will request and receive.
Mr. Conaway. All right.
Ms. Matiella, you mentioned some sort of an existing audit
program for 2011 through 2014. I could not figure out what you
are auditing. What is it that you are--in your testimony, you
talked--I thought it had to do with human resources. But what
is it that you are auditing each year?
Secretary Matiella. Well we are conducting audit
examinations at all of the installations that have already
implemented GFEBS [General Fund Enterprise Business System] to
make sure----
Mr. Conaway. Oh, okay.
Secretary Matiella [continuing]. That they have implemented
our new accounting system correctly, that they are practicing
the right technique and that they are becoming compliant not
only in the systems but in their processes. And we believe by
having these examinations every single year that it is also a
learning experience for the people who are going through the
examination.
They are understanding what is required by the auditors.
They have a better understanding of what compliant practices
are. And so it is not only work for them, but it is also a
learning opportunity for them in terms of what is auditability
about.
Mr. Conaway. Okay, all right. I understand. Thank you very
much.
Well, closing comments, Rob?
Mr. Andrews. Well I would like to thank the chairman, thank
the witnesses. I hear that we are all moving in the same
direction, which is good. That there is this level of
commitment that Mr. Rigell just talked about throughout the
Services to getting these audits done.
I think in this subsection of discussion, though, that I
heard another goal articulated today that I hope we all follow
up on. Which is that on a permanent basis, a financial
management professional is a person held in very high esteem
and supported, both in the uniform track in terms of promotion
for the uniform personnel, and the civilian track.
That this becomes, you know, one of the career-building
things that people want to do. And, you know, that is obviously
a challenge because there are so many dramatic and heroic and
significant things that people in the Department of Defense do,
both uniform and non-uniform. Thank God they do them.
And those are, you know, things that we are very grateful
as a country that people do. They cannot do their jobs if you
all do not do yours. If the infrastructure is not there to
support those who do the most difficult missions the difficult
missions become a lot more difficult. So what we are looking
for is ways--financially, educationally, in terms of pride and
self-respect and self-esteem--that we can elevate these
professions within our department.
Obviously, government-bashing is very much in vogue. And I
do not mean that as any ideological criticism, it comes with
the territory. We all sort of understand that. But the reality,
a lot of what people do is really very good. And I think we
have to find a way to motivate people who do that good work
with compensation, but also with praise and with professional
esteem.
And I think each one of you has exemplified that in your
own careers, in your own work, and your work here this morning.
So we would like to create that kind of environment where young
men and women like you decide to go into this field and excel
at it. Because the country will be better. So thank you.
Mr. Conaway. Thank the gentleman.
One of the things that we hope this panel has put together
is an ongoing way to assess that we are on track with this
overall goal that everybody wants to get to. And like Scott
said, I appreciate and sense the resolve you bring to the table
to make this happen.
One of the things that will happen next year. It may not be
this group, but one of the things that will happen next year,
we hope, is that we will look at those performance evaluations.
That we will say, ``Okay, here is what happened across the
spectrum of those. Some folks did it really well and some folks
didn't. And for those folks who didn't do it well, there are
consequences.''
``And for those folks who did it well, there are really the
appropriate consequences, as well, because we just simply have
to make this happen.'' And I know you agree with me in that
regard. But the one of the things it will do is to see how well
this system works in terms of keeping the civilian workforce
which has it specifically in their performance evaluation
plans, as well as the military side who are responsible for
making it happen also.
We just simply have to hold each other accountable for
doing the good job that must be done. And as we open this
hearing this morning, it is all about the people. You cannot
make this thing work without good people, well-compensated,
proud of the work they do, and knowing that the Nation is proud
of them as well.
So, gentlemen, thank you very much and we will adjourn.
[Whereupon, at 9:05 a.m., the panel was adjourned.]
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A P P E N D I X
October 6, 2011
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
October 6, 2011
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?
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WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
October 6, 2011
=======================================================================
RESPONSES TO QUESTIONS SUBMITTED BY MR. PALAZZO
Ms. Gregory. From April 2009, when Secretary Gates announced an
initiative to rebalance the Department's workforce and reduce reliance
on contracted services, through October 2011, the Defense Finance and
Accounting Services (DFAS) has formally converted a total of 668
positions previously performed by contractors to Government positions.
The majority, 606 positions, represent the Retired & Annuitant (R&A)
Pay function that was converted on February 1, 2010.
The motivation to insource was compliance with Section 324 and
Section 807 of the NDAA for Fiscal Year 2008, Public Law 110-181,
January 28, 2008. Section 324 required the Department to create
guidelines and procedures to ensure that consideration is given to
using DOD civilians to perform new functions or functions that are
performed by contractors. Section 807 required the Department to create
an inventory of service contracts for reporting purposes. Insourcing is
also a valuable means to achieve cost savings.
DFAS used the Agency Section 807 service contract inventory as a
baseline to identify insourcing opportunities from the pool of existing
service contracts. For each contract selected, we then executed a
business case analysis which primarily compared the cost of contractor
performance with the cost of Government performance. This cost analysis
was performed in compliance with Department policy and instruction. We
also examined additional relevant items such as mission impact,
customer service, and the ability to recruit and sustain Government
workforce for certain skill sets. Cognizant senior leaders then made
fact-based, best value business decisions on insourcing each contract.
DFAS has used insourcing to get a full picture of its total
workforce (General Schedule and Contractor) and make sure we are
achieving the right overall manpower mix that will allow DFAS to manage
costs more responsibly for the Department and the warfighter. [See page
17.]
Ms. Gregory. In April 2009, Secretary Gates announced an initiative
to rebalance the Department's workforce and reduce reliance on
contracted services. As part of this insourcing initiative, the
Department planned on establishing more than 30,000 new civilian
positions by FY 2015, including 10,000 specifically in support of the
acquisition workforce. In FY 2010, the Department established nearly
17,000 new civilian positions as a result of insourcing contracted
services, of which approximately 1,100 were in the financial management
workforce. Through the third quarter of FY 2011, an additional 5,300
civilian positions have been established as a result of insourcing
contracted services, including more than 200 in the financial
management workforce.
Insourcing has been, and continues to be, a very effective tool
used by the Department to rebalance the workforce, realign inherently
governmental and other critical work to Government performance (from
contract support), and in many instances to generate resource
efficiencies. While the Department, as part of its Efficiency
Initiative, has been asked to hold to FY 2010 civilian funding levels,
with some exceptions, for the next three years, we remain committed to
meeting statutory obligations to annually review contracted services,
identifying those that are inappropriately being performed by the
private sector and should be insourced to Government performance. These
include services that are inherently governmental or closely associated
with inherently governmental in nature; may otherwise be exempted from
private sector performance (to mitigate risk, ensure continuity of
operations, build internal capability, meet and maintain readiness
requirements, etc); or can be more cost effectively delivered by the
Government. Those contracted services that meet the necessary criteria
(consistent with governing statutes, policies, and regulations) will be
insourced by absorbing work into existing Government positions by
refining duties or requirements; establishing new positions to perform
contracted services by eliminating or shifting equivalent existing
manpower resources (personnel) from lower priority activities; or on a
case-by-case basis, requesting an exception to the civilian funding
levels. [See page 17.]
Ms. Gregory. The breakout of Active Duty officer and enlisted in
financial management positions is, 1,912 for officers and 6,164 for
enlisted for a total of 8,076. Specific information on the Reserve
components is not readily available. The total approximate number of
Reserves in financial management positions is 2,000. The ratio of
officer and enlisted in the Reserves should be similar to the Active
Duty. [See page 18.]
______
RESPONSES TO QUESTIONS SUBMITTED BY MR. ANDREWS
Ms. Gregory. According to the Department of Defense (DOD) Civilian
Personnel Management System: Training, Education, and Professional
Development (Number 1400.25, Vol 410) regulation states a Continuing
Service Agreement (CSA) is required for training that exceeds 80 hours,
at a minimum. DOD Components may establish lower minimums as
appropriate. A CSA must include provisions for an employee to reimburse
the DOD Component for training costs, except pay or other compensation,
if the employee voluntarily or involuntarily separates from service in
the Federal Government before completing the agreed period of service.
The Authorization, Agreement and Certification of Training form
states that if an employee voluntarily leaves the agency before
completing the period of service agreed to, he/she will reimburse the
agency for fees, such as the tuition and related fees, travel, and
other special expenses (excluding salary) paid in connection with
training. [See page 13.]
Secretary Matiella. Army civilian financial management training and
professional development were executed through colleges and
universities at $3.3 million in fiscal year 2009, $3.9 million in
fiscal year 2010, and $3.6 million fiscal year 2011. For active Army
military personnel, we spent $3.3 million in fiscal year 2010 and
remained steady at $3.3 million in fiscal year 2011.
Our Army learning institutions and universities routinely use
evaluations, performance test and course critiques to improve how they
train and educate Soldiers and Army Civilians. We use the feedback from
their measuring tools to develop and implement relevant training and
education to meet the students' competency needs. [See page 14.]
Secretary Morin. The AFAA staff working on financial statement
audit support are extremely experienced. There are 41 people in AFAA
working on the financial statement. Most are at the grade of GS-13. In
terms of education, 13 have BS Degrees and 27 have Masters Degrees. Of
that total, 59% (24 people) have relevant certifications like Certified
Internal Auditor (CIA), Certified Defense Financial Manager (CDFM), and
Certified Public Accountant (CPA). The average number of years of
financial management and audit experience is 20. In addition to the
post secondary education and extensive financial management and audit
experience, each auditor is required to hone their professional skills
with a total of 80 Continuing Professional Education (CPE) hours over a
two-year period. [See page 15.]
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