ASMC Viewpoint

DEFENSE FINANCIAL HIGHLIGHTS

On the Hill

President's State of the Union Address set for January 27:  The President will address both houses of Congress on Wednesday night January 27th in the traditional annual State of the Union Address.  He will give his evaluation of the current condition of the nation and lay out the framework for his FY2011 budget and legislative plan.  The White House is scheduled to release the FY2011 federal budget on Monday, February 1st.  This address fulfills the President's constitutional responsibility to report "from time to time" to the Congress "on the State of the Union."  President George Washington gave the first address on January 8, 1790.  This address will mark the 221st time Presidents have reported to Congress (either in person or in writing).  The Congressional Research Service has historical information on the history of the State of the Union Address.

Defense Budget and Financial Management News

GAO recommends changes to national security planning and budgeting:  In a speech to the National Defense University, the General Accountability Offices' (GAO) Acting Comptroller General, Gene Dodaro, urged DoD to work in a more collaborative way with other agencies, particularly State and the Agency for International Development (AID), to meet the changing "complexities" in the national security environment.  Dodaro was critical of existing planning and budgeting processes that reflect individual agencies' concerns rather than a collective, interactive approach to meeting national security goals.  He cautioned that the current fiscal environment facing DoD and other agencies make the need for stronger partnerships, interactive planning, and mutually-addresses solutions even more important today.  The complex nature of emerging threats to US security "transcend the scope and authority of any one agency" he said.  Dodaro also criticized DoD's business management failures, lapses in cost control, and its stove-piped approaches to planning and budgeting.  He said they have produced inefficiencies and program and budget mismatches.  Regarding DoD's financial management improvement efforts, Dodaro thinks the current prioritization of efforts identified by the DoD Comptroller is reasonable, but a long-term commitment by senior leadership is essential to success.  He also encouraged DoD to continue its efforts to address GAO-identified contracting and asset management weaknesses.  On Interagency planning cooperation, he listed four opportunities where agencies can improve their collaboration efforts:  1) develop and implement overarching and integrated national security strategies; 2) formalize coordination mechanisms; 3) develop well-trained workforces; and 4) share and integrate security information across agencies.

Rule would allow payments withhold from contractors with business systems problems:  A DoD draft ruling published in the Federal Register this week, would amend the Defense Federal Acquisition Regulation Supplement (DFARS) to add a new contract clause requiring contractors to certify that they have no major business systems defects.  The ruling defines business systems are comprising: accounting, estimating, purchasing, earned value management, and material management systems.  This clause would be added to cost reimbursement, incentive type, time and materials, and labor-hours contracts, as well as fixed-price contracts with progress payments, and some military construction contracts.  It a contractor has business systems deficiencies documented by Defense Contract Audit Agency (DCAA) auditors, and does not provide DoD within 45 days with a plan to correct those systems, contract officers could withhold 10 percent of contract payments.  This withhold could rise to 50 percent if it is determined that a contractor has deficiencies in multiple systems and to 100 percent if defects could lead to improper payments or represent an unacceptable risk of loss to the government.  DoD will take comments on this proposed ruling until March 16, 2010. 

DoD names John James to shut down NSPS:  DoD has named John H. James as the Director of the National Security Personnel System (NSPS) Transition Office.  James is currently serving as the executive director for logistics, maintenance, and industrial operations at the Naval Sea Systems Command.  His new job will be primarily to: 1) close down the NSPS (repealed in the FY2010 Defense Authorization Act); 2) direct the transition of former NSPS employees to other pay systems; and 3) design a new DoD-wide performance management and bonus distribution system for civilian employees.  He has said that he would work closely with employee union representatives during the transition a development of a new system.

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. 

Defense Legislative Research Reference Tool

Are you tired of web browsing through a myriad of Internet websites frantically searching for Defense related authorization and defense/military construction appropriations laws, bills, and Congressional reports only to come up empty handed? Well, here’s some help.

Certainly there are several excellent websites available to the general public to obtain such information like the U.S. Library of Congress’ official website (THOMAS); however, are you familiar with the Pentagon Library website and seen what it has to offer?  If not, a quick review may save you a lot of time and aggravation.  This website enables users to easily find in one location archived Defense related laws and Committee reports dating back several years.  Simply right click on the address below and select open the hyperlink: the Pentagon Library home page will appear.  Under the first section entitled “Collections” click on DoD Appropriations.  Once there scroll down to DoD Appropriations and click on either DoD Appropriations Laws, DoD National Defense - Authorization Laws, or Military Construction Appropriations Laws to access the public laws, Conference reports, or House/Senate Committee reports that you are interested in accessing. 

Pentagon Library