ASMC Viewpoint

Defense Financial Highlights

DoD on the Hill

House passes first of two final FY2010 Appropriations bills:  With the end of the current Continuing Resolution (CR) approaching, the House passed the FY2010 Transportation/HUD Appropriations bill that carried with it five other appropriations bills (Military Construction/VA, Commerce/Justice/Science, State/Foreign Operations, Financial Services, and Labor/HHS/Education).  This so-called "minibus" appropriations bill (because it contains most, but not all, remaining bills) also includes $600 billion for Medicare and Medicaid benefits, as well as $3.7 billion in state and local law enforcement grants, $2.5 billion for high-speed rail projects, and $2,2 billion for community health centers.  The Senate then turned from its debate on Health Care Reform to consider the bill.  But, because there was opposition from some Senators to adding extraneous material to appropriations bills, Sen. Harry Reid (D-NV) called for a vote to cut off debate (cloture) and force a final vote.  Final action in the Senate could some as early as Sunday.  The remaining FY2010 Appropriations bill--DoD--will most likely be considered next week.  However, because the bill may include an increase in the federal debt ceiling and jobs creation legislation, there is some uncertainty of its passage before the CR runs out next Friday.  So, there may have to be another CR after all. 

Senator proposes War Bonds to fund Afghanistan costs:  This week, Sen. Ben Nelson (D-NB) proposed legislation to authorize the Treasury Department to sell war bonds to fund the war in Afghanistan.  (As an historical note, the Congressional Research Service reports that the U.S. Treasury sold almost $186 billion in war bonds to fund WWII.)  This proposal has generated some interest, but does not have widespread support as it competes with other congressional suggestions such as, tapping unused stimulus funds, cutting nondefense budgets, or passing a war surtax.  Debate on how to pay the war costs will not begin in earnest until the President sends a supplemental request to the hill early next year.

Defense Budget and Financial Management News

OMB issues directive on open government:  Federal agencies must become more open and transparent and post public data online.  In a memo to federal departments and agencies, OMB Director Peter Orszag said the "Open Government Directive" (included in the memo) implements the principles of transparency, participation, and collaboration set forth by the President earlier this year.   Among the steps and deadlines for the agencies in the directive are:  1) post three "high-value" data sets online within 45 days; 2) designate a senior official within 45 days to be accountable for the "quality and objectivity of and internal controls over" spending information released to the public; 3) develop and publish on its website an "Open Government Plan" that describes how it will improve transparency, public participation, and collaboration of its activities.  Agencies will also have to track compliance with their plans.  These efforts will ave to be consistent with privacy and security rules.

Other Issues of Interest

Congress gives Federal civilian workers a 2 percent pay raise:  Federal civilian workers will get a 2 percent pay raise beginning January 1, 2010.  The FY2010 Financial Services Appropriations bill (included in the "minibus" Appropriations bill passed by the House and described above) provides an across-the-board raise of 1.5 percent and an average .5 percent locality pay increase.  The Senate will act on the bill this weekend or early next week.  According to House Majority Leader Steny Hoyer (D-MD), the bill's 2 percent pay raise, which includes a locality pay increase, is better than the President's proposal, which had no locality pay increase.  Hoyer also said that the White House told him that next year's budget request will provide civilian pay raises equal to military raises.

OPM issues guidance on payment of Reservist Differential:  Eligible federal employees who are also members members of the Reserve or National Guard will receive a "reservist differential" when called to active duty.  In a memo to department and agency heads, Office of Personnel Management (OPM) Director John Berry issued implementing guidance on payment policy and procedures for the differential.  If an eligible federal employee is called to active duty as a member of the Reserves or National Guard, the employee's agency must pay the difference between the employee's estimated federal basic pay and the actual military pay and allowances during the pay period.  The payment, authorized in the FY2009 Omnibus Appropriations Act, is effective beginning the first pay period after March 11, 2009.  Eligible employees must be called up under a call or order to active duty under sections of Title 10 and must be entitled to reemployment rights.  OPM provides further information in summary form or complete detail on its website.  

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Afghanistan and Health Care reform dominate Congress's' attention:  The President's troop increase announcement on Tuesday night and the Senate's continuing debate on Health Care reform (with a sidebar issue of White House security and party crashers) captured most of Congress' time and attention this week.  There was no movement on Appropriations bills.  It is likely that these two major issues will continue to command members' attention until adjournment later this month.  The Senate majority leadership's goal of finishing its Health Care bill before the end of the year means that only limited Senate floor time will be available to debate other legislation.  The President's announcement to commit an additional 30,000 troops to Afghanistan has already spawned four committee hearings  with testimony by State Sec. Hillary Clinton, Defense Secretary Robert Gates, and JCS Chairman ADM Mike Mullen and focused Appropriators' attention on how to pay for this deployment (see below).

FY2010 Omnibus Appropriations Bill(s) growing more certain:  With the end of the current Continuing Resolution (Dec. 18) approaching, congressional appropriators are working to come up with a plan to complete FY Appropriations Bills.  House Majority Leader Steny Hoyer (D-MD) expressed hope that final action on appropriations bills could be completed in the next two weeks.  But, the question now is:  In what form will the endgame be accomplished?  For some time, Hill observers have speculated that the remaining seven appropriations bills would be wrapped up into one bill, possibly the DoD bill.  Now they are talking about two bills.  GovernmentExecutive.com reported today that House Democrats are considering one bill that would include six Appropriations bills, as well as some job-related legislation and a short-term expansion of the Patriot Act.  The second bill, according to the report, would be the FY2010 DoD Appropriations bill, which could include an increase in the debt ceiling.  This latter approach might change due to strong opposition to including debt limit increases in other legislation. 

Defense Budget and Financial Management News

Congress proposes ways to fund Afghanistan troop increase:  When the President announced an increase in troop strength in Afghanistan by 30,000, he said he would work with Congress to fund his plan and strategy.  He didn't have to wait long for Congress' response.  Even before the announcement was made, members of Congress had begun sharing their ideas on how the $30 billion (Administration estimate) should be funded.  House Appropriations Chair Dave Obey (D-WI) proposed a special surtax to fund the additional costs.  Some Senate Democrats are taking about a special war tax.  Rep. Jerry Lewis (R-CA), also an appropriator, recommended reducing all nondefense agencies' FY2010 budgets by two percent.  Others have recommended transferring unused stimulus funding to DoD for the war.  In any case, Congress is likely to press for early consideration of a supplemental so they will have the opportunity to debate not only the funding but the strategy.

Other Issues of Interest

President formally recommends a 2 percent civilian pay increases 2010:  In a letter to House Speaker Nancy Pelosi (D-CA), President Obama reiterated his support for a two percent pay raise for federal civilian personnel and a freeze on locality pay at the 2009 level and issued an executive order to this effect,  The President cited sacrifices being made by employees in the private sector during the current economic downturn and budget affordability given the high deficits as the main reasons for his decision.  The Congress could still overrule the President if they pass and the President signs legislation providing for a higher raise.  This has often been done in past years.  Legislation for a higher raise would come in the FY2010 Financial Services Appropriations bill.  The House version of the bill, passed earlier this year, provides a 2 percent raise.  The Senate Appropriations Committee's bill, which has yet to come to the Senate floor, supports a 2.9 percent pay increase.  Hill observers think that is unlikely that the final bill will include a raise above 2 percent.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Congress recesses without further action on FY2010 Appropriations bills:  No FY2010 Appropriations bills advanced this week as Congress recessed for the Thanksgiving holiday.  When Congress returns next week it will begin debate on the Health Care reform bill in earnest.  It will also have less than three weeks (the CR runs out on Dec. 18) to determine if it can pass any more individual appropriations bills.  If it doesn't, it will most likely move to prepare an FY2010 Omnibus Appropriations bill that includes all remaining seven bills.  The DoD bill is still a good candidate to carry these bills forward to passage and presentation to the President for signature.

DoD Budget and Financial Management News

White House increase accountability for payment errors:  The White House this week issued an executive order requiring federal agencies to be more accountable for reporting and controlling erroneous payments.  Total improper payments in FY2009 reached some $98 billion (5 percent of total measured payments), up by $26 billion from FY2008).  The Director of OMB, Peter Orszag, stated that the increase was due primarily to improved identification of errors and increased outlays stemming from the current economic downturn.  Over half ($55 billion) of the improper payments were accounted for in the Department of Health and Human Services--almost all in Medicare and Medicaid.  DoD accounted for $850 million, less than one percent of the total.  The executive order lists four major areas of concern:  1) transparency and public participation; 2) identification and elimination of the highest improper payments; 3) agency and executive accountability for reducing improper payments; and 4) coordination among Federal, State, and Local governments to identify and eliminate improper payments.  Agencies will be required to set up an improper payments dashboard on their websites showing error rates and payment issues still to be addressed and to name a Senate-confirmed official to be accountable for improper payments issues.  In addition, agencies will have to set and meet targets for reductions to improper payments and have agency inspectors general to approve those targets.

Other Areas of Interest

Maria Matella nominated to be new Army FM:  This week the President nominated Ms. Maria Sally Matella to be the new Army Assistant Secretary (Financial Management and Comptroller).  Ms. Matella has extensive experience in accounting for the Army, Air Force, DFAS, and OSD.  She has served most recently as the Assistant CFo for accounting at the Department of Housing and Urban Development.  Before that, she was the CFO of the Forest Service.  While at DoD, Ms. Matella was a staff accountant for OSD Comptroller, a financial manager at DFAS, and worked for the Army and Air Force at installations in the U.S. and overseas.  She received undergraduate and graduate degrees at the University of Arizona.

Retirements present supervisory challenges and opportunities:  Almost 60 percent of federal workers who will be eligible to retire through 2014 will indeed retire, according to a report by the Merit Systems Protection Board.  A large proportion of those who will retire are expected to be supervisors, as they are older and have more time in service.  These expected retirements present agencies with a problem--the much-discussed brain drain.  But, the report states that it also will give agencies an opportunity to mold the future supervisory force to better meet the challenges of a changing federal workplace and workforce.  The emphasis, according to the Board, for new supervisors should be placed more on management than on technical skills.  The changing workplace,such as increases use of teleworking, will require managers to be more creative in managing work flow indirectly rather than through direct observation of employees.  This will place a premium on enhancing thee communications skills of supervisors.  The report recommends that agencies:  1) examine demands on supervisors to ensure that they have the requisite competencies, time, and resources to do their job; 2) build programs for supervisors that consider changing workplace and supervisory requirements; 3) develop valid methods to assess supervisors' competencies; 4) develop training programs that emphasize teamwork, cooperation, and employment empowerment; and 5) use "focused recruitment and valid assessments while following the merit principles" when recruiting new supervisors.

DoD rules on restrictions for post-employment work with contractors:  DoD has released the final rule on restrictions on senior acquisition employees seeking post-employment private sector jobs.  Under the rule, senior officials who "have participated personally and substantially in a DoD acquisition program exceeding $10 million" or held key acquisition positions will be required to obtain a post-employment ethics opinion before taking a job with a DoD contractor within two years after leaving DoD.  This action does not change the interim rule that was issued in January 2009.  DoD acted in response to the requirements of a provision in the FY2008 National Defense Authorization Act.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Senate passes FY2010 Military Construction./VA appropriations bill:  The first piece of work for the Senate upon returning from the Veteran's Day recess was to pass, unanimously, the FY2010 Appropriations bill.  The House passed the bill In July.  The Senate bill provides $23.2 billion for total Military Construction appropriations, over $285 million above the request and $50 million over the House bill.  The Senate adds $350 million (not included in the House bill) to fund the remaining requirements of the temporary expansion of the Homeowners Assistance Program (HAP) provided in the economic stimulus legislation.  This expansion funds assistance to military members and certain civilians who have orders to relocate and have difficulty selling their homes or experience extreme loses in selling as a result of the current economic downturn.  For military facilities construction, the Senate bill reduces active forces funding by $350 million and adds $260 million to reserve forces construction.  The Senate makes no change to the Family Housing request and adds $25 million to funding for BRAC.  You can find additional detail in the Senate Appropriations Committee report.  The Senate will now conference with the House to resolve the differences in the bills.

Congress makes little progress on FY2010 Appropriations bills:  Except for the Senate's action on the Military Construction/VA bill, no FY2010 appropriations bills advanced in Congress this week.  The House has passed all 12 appropriations bills, while the Senate still has not passed three (Financial Services, Labor/HHS/Education, and State/Foreign Operations).  There are four bills in conference (Commerce/Justice/Science, DoD, Military Construction/VA, and Transportation).  Hill observers indicate that it is now looking more likely that the DoD bill, or any other bill for that matter, will not be reported out of conference before the Thanksgiving recess next week.  Under this scenario, it is a better than even chance that the DoD bill could include the other unfinished bills (in an Omnibus bill) and carry them into enactment. 

Defense Budget and Financial Management News

FY2010 Defense Authorization Act contains financial management-related legislation:  Want to know what financial management-related legislative language is in the FY2010 Defense Authorization Act?  No need to read the entire bill to find relevant items.  The Defense Finance and Accounting Center (DFAS) has done the work for you.  You will find all pertinent FY2010 legislative language on the DFAS web site in the legislative affairs section.  DFAS also has similar list for FY2009 and FY2008 on the same site.

Business Transformation Agency releases BEA 6.2:  The Business Transformation Agency (BTA) announced the release of Business Enterprise Architecture (BEA) 6.2, the second informational release since BEA 6.0 was delivered in March 2009.  The BEA defines DoD's business transformational requirements and the business capabilities to meet those requirements.  The annual informational releases contain interim content updates that allow stakeholders to better understand future requirements and for planning purposes and give them the opportunity to accelerate implementation.  This year's update (6.2) includes enhanced mapping of 15 End-to-End (E2E) business flows into the BEA and realignment of DoD Architecture Framework products:  OV-5 Node Tree and OV-5 Operational Activity Models.  According to BTA's announcement, the E2E improvement will provide a better alignment between business capabilities and Enterprise Resource Planning (ERP), which will make both more useful to decisionmakers.  The realignment of OV-5 Node Tree and OV-5 Operational Activity Models will make for a more consistent numbering of both activities.

 Other Items of Interest

Erin Conaton nominated to be new Air Force Under Secretary:  Last week, the President nominated Ms. Erin Conaton to be the new Under Secretary of the Air Force.  The position has been vacant since Ron Sega resigned in 2007.  Ms. Conaton has been on the staff of the House Armed Services Committee since 2001 and currently serves as the Staff Director.  Before that, she was a research director for the U.S. Commission on National Security (Hart-Rudman Commission).  She is a graduate of Georgetown University and received a master's degree from Tufts University Fletcher School of Law and Diplomacy.

Sen. Byrd becomes longest serving sember of Congress:  Sen. Robert C. Byrd (D-WVA) this week became the longest serving member of Congress in history--56 years and 320 days.  Sen. Byrd passed the previous record set by Sen. Carl Hayden (D-AZ), who served from 1912 to 1969.  Those who have followed much of his time in Congress, remember the many interesting aspects of his character and his legislative life.  Over his career, he has a 98 percent attendance record and has cast over 18,000 votes.  For many years as Chair and ranking minority member of the Senate Appropriations Committee, Sen. Byrd has underscored his strong belief in Congress' "power of the purse" to thwart presidential policies.  He has been referred to as the "king of pork" for his unapologetic support for congressionally-funded projects for his native West Virginia.  He is a recognized expert on Senate traditions (he wrote a four-volume Senate history) and is a master of congressional procedure.  He routinely quotes classical literature, especially Caesar, Plutarch, and Livy, during Senate debates.  If you have watched him over the years in the Senate, as this reporter has, you will remember how he would often reach into his pocket and retrieve a copy of the Constitution (which he always carries with him) to make a debating point and his frequent references to his dog Billy.  Congratulations to Sen. Byrd.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Congress stalls on FY2010 Appropriations bills:  With the Veteran's Day recess (Nov. 11-13) looming and only one day for voting, no appropriations bills advanced in Congress this week.  The Senate did begin action on the Military Construction/VA bill, but after considering a few amendments, delayed the final vote until early next week.  Senate Appropriations Committee Chair Sen. Daniel Inouye (D-HI) wanted to bring one more bill to the floor next week, but that is now optimistic at best.  And, the three bills in conference (DoD, Commerce/Justice/Science, and Transportation) show few signs of resolution.  Appropriations Committee leadership had hoped to finish the DoD bill, but conferees did not resolve all issues.  Many members and Hill observers are becoming more resigned to rolling up the seven unsigned bills into an omnibus appropriations bill after the Thanksgiving Day recess (Nov. 23-29).  Remember, the current Continuing Resolution runs out on December 18. 

Defense Budget and Financial Management News

OFPP issues guidance on Acquisition Workforce Plan:  Late last month, the Office of Federal Procurement Policy (OFPP) issued the Acquisition Workforce Strategic Plan for Civilian Agencies-2010-2014 as required by the FY2009 Defense Authorization Act.  OFPP leadership believes that agencies' current plans have too often been focused on short-term needs, rather than addressing long-term growth and personnel succession challenges.  This strategic plan is to address those deficiencies by providing a structured approach to improving the capability of the  federal acquisition workforce.  It establishes a five-year plan to improve workforce management infrastructure, increase the use of intern programs, and implement an annual planning process to be managed by OFPP.  Agencies must submit their initial plan to OFPP by March 31, 2010 and again each year through 2014.

DoD developing common standards for DCAA and DCMA:  Testifying before the Commission on Wartime Contracting, Shay D. Assad, Acting Deputy Under Secretary of Defense (Acquisition and Technology), stated that the Defense Contracting Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) must work together to effectively oversee DoD's contractors' business systems.  Mr. Assad, who is also Executive Director of DoD's Panel on Contracting Integrity, said that the Department must move to correct business systems that produce unreliable information.  The Panel will take the lead in this effort by assessing DoD's progress in eliminating vulnerability to fraud, waste, and abuse.  The Subcommittee on Business Systems of the Panel, comprised of such stakeholders as DCAA, DCMA, and the Army, will focus on clearly defining roles of DCAA auditors and DCMA contracting oofficers. It will also recommend a process for resolving differences between audit recommendations and contract officer determinations.  Mr. Assad did not criticize the quality of DCAA's and DCMA's work and did acknowledge that auditors and contracting officers have different roles.  But, he underscored that the two agencies must work together, using common standards, to be effective.

Other Issues of Interest

FY2010 Defense Authorization bill blocks TRICARE fee increases:  Reacting  quickly to pressures from military retiree complaints, conferees on the FY2010 Defense AUthorization bill included language that reversed an announced increase in daily hospital copays and other TRICARE fee increases.  The President's FY2010 Defense Authorization request did not include an TRICARE fee increases.  However, on September 30, DoD announced that TRICARE daily hospital copays would increase by $110 for retirees and family members and survivors, effective Oct. 1, 2009.  This announcement created a firestorm in the military retiree community.  Associations such as the Military Officers Association of America (MOAA), Retired Officers Association (ROA), and the National Association for Uniformed Services (NAUS)  acted quickly to bring this to the attention of the House and Senate authorizers and demand a reversal.  Interestingly enough, for the past three years, Defense Authorization bills had included language preventing any TRICARE fee rises.  But this year, neither the House nor Senate bill included such a prohibition, presumable because the President did not request fee increases.  But, in response to retirees' outcries following the DoD announcement, House and Senate conferees added a provision in the final FY2010 Defense Authorization bill that prevented higher TRICARE fees in FY2010.  As they say in tennis:  point, set and match!

Note:  A question from a member made us realize that we had missed an opportunity to report on an issue important to our members.  We don;t always catch, or report on, every issue, so we appreciate this kind of feedback.  Our aim is to provide members with up-to-date information on news of interest and we encourage and welcome your comments and suggestion.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

FY2010 Appropriations bills inch forward:  Congress remained focused on Health Care reform and the economy this week, but still recorded some progress on appropriations bills.  The Senate passed the FY2010 Commerce/Justice/Science appropriations bill (bringing to eight the number of Senate-passed bills) and expects to complete action on the Military Construction/VA appropriations bill next week.  Sen. Daniel Inouye (D-HI), Senate Appropriations Committee chair, stated that he hopes to finish the remaining three bills in the next few weeks, possibly before the Thanksgiving Day recess.  In the House, Rep. Jack Murtha (D-PA), House Appropriations Defense Subcommittee chair, is reported to have voiced cautious optimism that the bills currently in conference (including the DoD bill) could be completed before Thanksgiving Day.  Analysts watching the process continue to speculate that there is a chance that many of the remaining unsigned bills could be wrapped up in an Omnibus Appropriations bill before the recess.  There are some reports that committee staffs have been told to finish unresolved issues by the end of next week.  So, we could see a flurry of activity on appropriations bills before December.  Watch this space.

FY2010 DoD Appropriations conference still not finished:  House and Senate conferees on the FY2010 DoD Appropriations bill have not yet formally met to approve the bill.  Rep. Jack Murtha, House Appropriations Defense Subcommittee chair, has been quoted as saying most differences have been resolved and he hopes that the conferees can meet next week.  News reports listing the House members under Ethics Committee investigation could have a delaying effect on the deliberations, especially if the conferees review earmarks included in the bill.  However, most analysts discount the effect of these reports on final action.

Defense Budget and Financial Management News

OMB to revamp performance management systems:  The Obama administration believes that neither Congress nor the federal agencies effectively use the current performance management systems--Government Performance and Results Act (GPRA) and the Program Assessment Rating Tool (PART)--to track progress on achieving management goals.  Jeffrey Zeints, OMB's Chief Performance Officer and Deputy Director for Management, testified before the Senate Budget Committee last week that the current systems place too much emphasis on "producing performance information to comply with a checklist of requirements instead of using it to drive change."" Zeints cited several state and local government and even other countries that provide valuable lessons in measuring government performance.  The Administration appears to be moving toward developing a new performance management system to improve management efficiencies and effectiveness and will utilize the best of what has proved to work.  OMB will review the current management systems to determine which ones do not meet the principles of 1) connecting outcome-oriented goals to agencies' missions; 2) accountability; and 3) process transparency.  Those systems or parts of systems that do not measure up will either be eliminated or streamlined.  OMB will also emphasize scaling back reports that generate hundreds of pages that do not provide relevant data or information to inform budget decisions.

OMB issues guidance on President's procurement reform goals:  Late last month, the Office of Management and Budget (OMB) issued long-awaited guidance to implement priorities of the President's procurement reform proposals, issued in March.  This guidance, prepared by the Office of Federal Procurement Policy (OFPP) is intended to help agencies meet the goals set by OMB in July to save seven percent of baseline contract spending by the end of FY2011 and to reduce by 10 percent new contract dollars in FY2010 for noncompetitive or single-bid contracts, cost reimbursement contracts, and time and material contracts.  The OFPP guidelines are to assist Chief Acquisition Officers (CAOs) and Senior Procurement Executives to: 1) maximize the effective use of  competition; 2) mitigate risk when using noncompetitive, cost reimbursement, and time and material contracts, and 3) create opportunities to go to more competitive and lower risk contracts.  

Other Issues of Interest

FERS unused sick leave benefit to be phased in:  When the President signed the FY2010 Defense Authorization bill he ushered in a new benefit for FERS workers--authority to count unused sick leave when calculating retirement benefits (just like their CSRS colleagues).  However, as it true with much legislation providing new benefits, 100 percent on the benefit does not immediately go into effect.  A reading of Section 1901 in the authorization bill reveals that if a FERS worker retires before January 1, 2014, only 50 percent of unused sick leave can be used to calculate benefits.  Those FERS employees who retire after that date will be able to use 100 percent of unused sick leave.  Check with you personnel office for complete details.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

CR extended until December 18:  Congress passed, and the President is expected to sign, an extension of the Continuing Resolution (CR) for FY2010 until December 18, 2009.  The CR, which is attached to the FY2010 Interior and Environment Appropriations bill, will provide funding for seven appropriations bills, which have not yet been signed into law.  Two bills are in conference between the House and Senate (DoD and Transportation/HUD).  Five other bills (Commerce/Justice/Science, Financial Services, Labor/HHS/Education, Military Construction/VA, and State/Foreign Operations) await Senate floor action before they can go to conference.  Action on appropriations bills slowed to a crawl this week as Congress turned its attention to Health Care reform.  Now that the CR has been extended for seven weeks, the pressure for quick action on appropriations seems to have waned.  To follow what action there is on the FY2010 appropriations bills, go to the Library of Congress' Thomas website.

FY2010 DoD Appropriations conference still not finished:  House and Senate conferees did not complete work this week on the FY DoD Appropriations bill.  So the DoD bill joins six other appropriations bills in the CR.  However, action could be completed quickly now that the FY2010 Defense Authorization bill is ready for signature.  Look for the DoD bill to be completed and sent to the President between now and Veterans' Day. 

President signs FY2010 Defense Authorization Bill:  The President signed the FY2010 Defense Authorization bill this week.  The bill contains a number of public-private competition provisions of interest.  It temporarily suspends public-private competition under A-76 until DoD reviews existing policies and procedures and complies with current legal requirements. It also places time limits on the length of competitions for activities that are now being performed by federal employees.  The bill also includes financial management provisions of interest.  It sets a goal for DoD to achieve and auditable financial statement by September 30, 2017, and requires DoD to use business process re-engineering before it acquires new IT systems.

Defense Budget and Financial Management News

Hale issues priorities for achieving audit readiness:  In case you missed it, a few months ago Under Secretary of Defense (Comptroller) Robert F. Hale issued a memo that outlined DoD's priorities for improving financial information and processes to support audit readiness.  Hale advised that due to limited DoD resources, each DoD Component must address financial management improvement efforts in priority order to achieve the most effective and useful results.  The primary goal is working to achieve unqualified audit opinions.  But, emphasis is to be placed on improvements that make information more useful to DoD managers.  The memo advises DoD Components to adjust current plans to focus on Statements of Budgetary Resources and then on mission critical assets. 

CBO projects increased resources needed to meet DoD's budget plan:  The Congressional Budget Office (CBO) released it long-term assessment of DoD's FY2010 budget plan in testimony before the House Budget Committee.  According to CBO estimates, executing the FY2010 DoD baseline budget will require six percent more funding than requested.  CBO cites continuing growth in pay and benefits, greater than exp[ected increases in O&M funding, cost growth in weapons systems, and investments in new capabilities as major cost drivers.

Other Issues of Interest

Patrick Fitzgerald named to head DCAA:  DoD announced this week that Patrick Fitzgerald will replace April Stephenson as director of the Defense Contract Audit Agency (DCAA).  Ms. Stephenson has been directort since February, 2008.  Mr. Fitzgerald is currently the Army Auditor General and head of the DCAA Oversight Committee.  DCAA has recently been buffeted by congressional criticism of its lack of effectiveness in controlling fraud and waste in DoD contracting.  The agency has also been the subject of recent General Accountability Office (GAO) reports charging it with failure to follow auditing standards, inadequate auditor independence, and lack of sufficient planning and supervision of DoD auditors.

Bob Speer is acting Assistant Secretary of the Army (FM&C):  Robert M. Speer is the Acting Assistant Secretary of the Army (Financial Management and Comptroller) until the President nominates someone for the Post.  Earlier this month, he was designated the Principal Deputy Assistant Secretary of the Army (FM&C).  Bob comes back to the Army after spending four years with Pricewaterhouse/Coopers Public Services where he worked in the area of audit support and enterprise risk management.  Prior to that, he had a distinguished Army military career and served in many areas of financial management and operations for the Army and the Defense Finance and Accounting Service (DFAS).

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Appropriations bills make little progress:  The President signed the FY 2010 Agriculture Appropriations bill this week, making it only the second appropriations bill signed so far (the Legislative Branch bill--including the Continuing Resolution (CR)--was signed in early October).  In the only other action of note, the final Homeland Security Appropriations bill passed the Senate and, along with the Energy and Water bill, awaits the President's signature.  House Majority Leader Steny Hoyer (D-MD) criticized the Senate for not passing five appropriations bills still on their docket.  There are three bills in conference that could be completed and be ready for the President next week (DoD, Interior & Water, and Transportation).  But even if this should happen, Congress will have to pass an extension of the current CR, which expires on October 31.  It is being reported on the Hill that the House is now working up a bill to extend the current CR until December 15.  there is also a possibility that Congress will not be able to finish all appropriations bills before Congress adjourns for the year.  If that happens, they will have to package the remaining bills in an Omnibus FY 2010 Appropriations bill.  Students of legislative history will remember the President signed an FY 2009 Omnibus appropriation bill in March of this year that contained 9 appropriations bills (all but DoD, Homeland Security, and Transportation, which were passed together on September 30, 2008). To follow the action on the FY 2010 appropriations bills, go to the Library of Congress' Thomas website.

FY2010 DoD Appropriations conference could end soon:  House and Senate conferees are winding down their work on the Fy 2010 DoD Appropriations bill.  They could be ready to pass and send the conferenced bill to the President next week.  House Appropriations Defense Subcommittee chair Jack Murtha (D-PA) stated in an interview this week that there are just a few items remaining to be resolved, including funding for the new presidential helicopter (which had drawn a presidential veto threat).  Action could slow down if, as reported, some members push to include unpassed appropriations bills in one Omnibus bill attached to the DoD bill, which is considered politically a must-pass bill.  However, there is no widespread support for such a move at this time so the bill is likely to go forward. 

FY2010 Defense Authorization bill sent to the President:  After voting to cut off debate, the Senate yesterday approved the final FY2010 Defense Authorization bill and sent it to the President for signature.  The President had earlier threatened to veto the bill if it contained funding for the F-35 alternative engine program.  The final bill contains this funding, but Senate leaders believe the White House will approve the bill notwithstanding.  The final bill contains a 3.4 percent military pay raise, repeals the National Security Personnel System (NSPS), and provides authority for federal retirees under the Federal Employment Retirement System (FERS) to receive credit for unused sick leave when calculating retirement payments.  It also funds more than requested F/A-18-E/F and C-17 aircraft and ends F-22 buys.  To read a summary of the FY2010 Defense Authorization conference report, go to the Senate Armed Services Committee website.

Other Items of Interest

Public-Private pay gap widens in 2009:  CovExec,com reported this week the Federal Salary Council announced that the difference between the average pay for federal and private-sector employees increased from 25.17 percent in 2008 to 26.42 percent in 2009.  However, the Council made no further recommendation on the 2010 federal pay increase, citing the lack of final congressional action on the raise.  Analysts expect the raise to be between 2 percent proposed by the President and approved in the House-passed Financial Services Appropriations bill and the 2.9 percent raise included in the Senate Appropriations committee version of the bill.  The FY2010 Defense Authorization bill includes a 3.4 percent military pay raise.

President nominates Gladys Commons to be Navy FM:  In case you missed it, President Obama has nominated Ms. Gladys J. Commons to be Assistant Secretary of the Navy (Financial Management and Comptroller).  The Senate Armed Services Committee held her confirmation hearing yesterday.  Most recently, Ms. Commons served as Comptroller of the Military Sealift Command.  Many ASMC members will remember that she was the Principal Deputy Assistant Secretary of the Navy (Financial Management and Comptroller) for eight years ans was Acting Assistant Secretary for a short time.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Appropriations bills move forward, slowly:  After showing a flash of activity last week, congressional action to complete FY 2010 Appropriations bills slowed a bit this week.  Only two bills moved forward:  1) the final FY2010 Energy and Water bill passed the Senate and joined the Agriculture bill in the queue for the President's signature; and 2) the Homeland Security bill finished conference, was passed in the House, and now awaits Senate final action.  In a press interview, Sen. Inouye (D-HI), chair of the Senate Appropriations Committee, again stressed his desire to move appropriations bill along before floor action begins on the Health Reform bill later this month.  He has set his sights on the DoD, Transportation, and Interior & Environment bills.  To follow the action on the FY 2010 appropriations bills, go to the Library of Congress "Thomas" web site.

FY 2010 DoD Appropriations bill conference continues:  House ans Senate conferees continued work on the Fy 2010 DoD Appropriations bill this week, but no agreement was reached.  In a letter to the conferees, Secretary Gates again stated that he would recommend that the President veto a bill that provides funding for a new presidential helicopter and the F-35 alternative engine program.  Appropriators appear to be more supportive of the F-35 second engine program than funding for the new helicopter.  They may be helped by the authorizers in their efforts to save the engine funding.  The FY 2010 Defense Authorization conferenced bill also contains funding for the engine program.

FY 2010 Defense Authorization bill not yet ready for the President:  Last week it appeared that the FY 2010 Defense Authorization bill was going to the President for signature very soon.  The House had passed the bill and the Senate seemed ready to act.  However, a week has gone by and the Senate still has not brought the bill to the floor.  It may be that the Senate is waiting for the Appropriations conference to finish before they act.

Other Issues of Interest

No COLA adjustment for federal retirees and Social Security recipients in 2010:  A number of press sources reported this week that there will be no cost of living increase for federal retirees and Social Security recipients next year.  In 2009, federal retirees under CSRS received a 5.8 percent increase in their annuity checks and FERS retirees got a 4.8 percent increase.  The 2009 Social Security increase  was 5.8 percent.  To partially offset the lack of increase for those on Social Security, the President has announced his support for a one-time payment of $250.  This payment could come from already enacted stimulus funding.

DEFENSE FINANCIAL HIGHLIGHTS

DoD on the Hill

Senate moves to complete appropriations bills:  To date, Congress has completed and the President signed only one FY 2010 appropriations bill--the Legislative Branch bill, which includes a Continuing Resolution funding the rest of the rest of the government through October 31.  But, now the pace of congressional activity is increasing as it hopes to move appropriations bills before attention turns to Health Care Reform on both the House and Senate floors.  The Senate wants to complete the five bills they have not passed so conferees can finish as many bills as they can before the CR ends.  The Agriculture and the Energy & Water bills are on the verge of going to the President.  Four other bills are in conference (DoD, Homeland Security, Interior & Environment, and Transportation) and could be ready for the President's signature in a week.  And, the Commerce, Justice, & Science bill will soon be ready to go to conference.  o track the status of the FY 2010 appropriations bills, go to the Library of Congress' "Thomas" web site.

 FY 2010 DoD Appropriations conference begins:  The Senate passed the FY 2010 DoD Appropriations bill this week and began meeting with the House to iron out differences between the bills.  Among the issues conferees must resolve are funding for a new presidential helicopter and for the alternative engine for the F-35.  President Obama has issued veto threats (albiet not too strong as veto threats go) if the final bill includes funding for these two programs.  Many observers in the press indicate that the White House has recently eased back on its threat.  You can review the House-passed bill and the Senate-passed bill for further details.

FY 2010 Defense Authorization bill ready for the president:  House and Senate conferees finished work on the FY 2010 Defense Authorization bill this week.  The House passed the bill and the Senate will soon follow.  The final bill could go to the President next week.  Conferees provided a 3.4 percent pay raise for military personnel, up from the 2.9 percent requested by the President.  While the bill does approve many program terminations and adjustments the President requested, it does authorize buying more F/A-18E/F and C-17 aircraft than requested.  And in a challenge to a presidential veto threat, conferees agreed to provide funding for the F-35 alternative engine program. Of interest to DoD financial managers, the bill sets a goal for the achievement of a DoD auditable financial statement by September 30, 2017.  To review a summary of the FY 2010 Defense Authorization conference report, go to the Senate Armed Services Committee web site.

Defense Budget and Financial Management News

 OMB issues guidance on performance management:  OMB Director Peter Orszag sent a memorandum to agencies this week announcing a set of program evaluation initiatives as part of the FY 2011 budget process.  The initiatives include: 1) greater transparency in making evaluation information and results available online; 2) an interagency working group on performance management to develop government-wide guideline for performance evaluation; and 3) a voluntary program for agencies to request additional funding to support high-priority evaluation activities.  Initial efforts of these activities will focus on social, educational, and economic program.  Other programs, such as national defense, will not be included in the initial scope.

Other Issues of Interest

Congress repeals NSPS:  The final FY 2010 Defense Authorization bill ready for the President's signature repeals the National Defense Personnel System (NSPS) and requires DoD to transfer NSPS employees to existing personnel systems.  The bill also allows DoD to propose flexibilities in hiring, assigning, and rating personnel, but requires congressional approval.  Earlier this year, the Defense Business Board issued a report that recommended the reconstruction of NSPS.  Secretary Gates has directed a thorough review of the report and had asked the Defense Authorization Committee to give DoD time to complete the review before acting.

FERS employer to receive retirement credit for unused sick leave:   In a surprise move, conferees included a provision in the FY 2010 Defense Authorization bill (see above) that provides credit for unused sick leave to retiring federal workers covered under the Federal Employment Retirement System.  Earlier reports had indicated that the provision would not be in the final bill.  Heavy pressure from employees unions and congressional supporters seemed to have turned the tide.  The benefit, which will be phased in over four years, allows FERS employees to apply unused sick leave when they calculate their length of service to determine retirement pay.  Workers covered under the Civil Service Retirement System (CSRS) already have this benefit.

ADM Mullen to continue as Chairman of the JCS:  In case you missed it, last month the Senate confirmed ADM Mike Mullen for a second two-year term as Chairman of the Joint Chiefs.  ADM Mullen is the 17th Chairman and was sworn in for his first term on October 1, 2007.  As Chairman, ADM Mullen is the senior ranking member of the Armed Forces and is the principal military advisor to the President.  For more information on the functions of the Chairman, go to the JCS web site.