fourth estate/defense-wide update session...fourth estate/defense-wide update session...
TRANSCRIPT
Fourth Estate/Defense-Wide
Update Session
Washington-ASMC National Capital Region PDI
March 8, 2018
• Budget Overview
Ms. Anne J. McAndrew (Moderator): Director, Military Personnel & Construction
• O&M Defense-Wide Budget Perspectives
Monique Dilworth: Director, Operations
• Investment Defense-Wide Budget Perspectives
Mary Ann McAfee: Associate Director, Investment
• Congressional Update
Mr. Michael Benjamin: Associate Director, Budget and Appropriations Affairs
• Fourth Estate Audit UpdateMs. Mobola Kadiri: Director, Financial Improvement and Audit Readiness
• Financial Management Workforce Update
Ms. Glenda Scheiner: Director, Human Capital and Resource Management
The Changing Business Environment within the Fourth Estate – an FM Perspective2
OUSD(C) Panel Composition
Fourth Estate Service Hour Discussions
FY 2019 President’s Budget
Overview
Ms. Anne J. McAndrew
Director, Military Personnel and Construction
OUSD(C)
National Security Strategy4
• Respond to growing political, economic, military, information competitions
– Revisionist powers such as China and Russia
– Regional dictators such as Iran and North Korea
– Transnational threats, including jihadist terrorists and transnational criminal organizations
• Protect four vital national interests
– Protect the American people, homeland, and way of life
– Promote American prosperity
– Preserve peace through strength
– Advance American Influence
A Strategy of Principled Realism
2
National Defense Strategy
• Compete, Deter, and Win to Preserve Peace through Strength
– Expand the competitive space leveraging all elements of national power
• Competition with China and Russia is central challenge
– Continue efforts to deter and counter North Korea, Iran, and terrorists
• Sustain U.S. influence and ensure favorable regional balances of power
– Build a more lethal, resilient, agile, and ready Joint Force
– Strengthen alliances and attract new partners
– Reform the Department’s business practices for greater performance and affordability
Great Power Competition is now the Primary Focus
3
FY 2019 National Defense Budget Request
(Dollars in Billions)
DoD – Military - Base Budget Request $617
DoD - Military - Overseas Contingency Operations (OCO) 69
Total DoD Military (051) $686
Other National Defense (053/054) – such as Dept of Energy 30
Total National Defense (050) $716
• Budget driven by the National Defense Strategy
• FY 19 PB - $74 Billion (10% real growth) over DoD’s current CR levels
• Appreciative of the Congress enacting the Bipartisan Budget Act of 2018
• We are committed to being good stewards of the taxpayers’ money
4
A Strategy Driven Budget
0%
5%
10%
15%
20%
25%
30%
35%
40%
1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
DoD Outlays
Defense Outlays vs. Gross Domestic Product FY 1940 – FY 2019
5
2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019
DoD Outlays % 4.5% 4.4% 4.1% 3.7% 3.4% 3.1% 3.1% 3.0% 3.1% 3.1%
1944
35.5%
1953
11.3%1968
8.6% 1985
5.7% 2010
4.5% 2019
3.1%
“America can afford survival” – Secretary Mattis
*Reflects annualized Continuing Resolution funding levels
$470
$490
$510
$530
$550
$570
$590
$610
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
FY 2011 Enacted with Inflation FY 10-11-12 Actuals Original BCA Caps Prior BBA Caps
Original BCA Caps
FY 2018 CR*
Prior BBA Caps
Defense Base Budget(Dollars in Billions)
6
-$406.5 billion
FY 2018 Request
Begins Recovery from over $400 Billion of Lost Capability
FY 2018 BBA
*FY 2018 CR ($529B) + $15B of OCO-for -base requirements BCA = Budget Control Act BBA = Bipartisan Budget Acts (2011, 2013, and 2018)
FY 2019 Request
$0
$100
$200
$300
$400
$500
$600
$700
$800
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
DoD Funding from FY 2010 Through FY 2023
Numbers may not add due to rounding(Then Year Dollars in Billions)
Base Budget OCO/Other Budget
(Discretionary Budget Authority)
524
580 606
691 687
645
560578 581
163 159 115
82 85 6382
528 528 495 496 497 521
7
5
Missile Defense*
617
686
69
CR
*Division B, P.L. 115-96, DoD Missile Defeat and Defense Enhancements Appropriations Act, 2018
2020
2020
681 694 722
701 714727 742
530 707523
59
83
612
Increases funding $74 Billion (10% real growth) over CR Levels
FY 2019 President’s Budget Military End Strength
1/ FY 2017 Actuals
2/ FY 2018 PB Request. FY 2018 NDAA (P.L. 115-91) increases FY 2018 PB end strength by 9.5K (Army +8.5K (Active +7.5K Reserve +0.5K; Guard +0.5K); USMC +1.0K).
8
Builds Capacity & Lethality – FY 2019 +25.9K and +56.6K by FY 2023
Military Component FY 20171/ FY 20182/ FY 2019 FY 2023 Δ FY18-19 Δ FY18-23
Active Components (AC)
Army 476,245 476,000 487,500 495,500 +11,500 +19,500
Navy 323,944 327,900 335,400 344,800 +7,500 +16,900
Marine Corps 184,514 185,000 186,100 186,400 +1,100 +1,400
Air Force 322,787 325,100 329,100 338,800 +4,000 +13,700
TOTAL AC 1,307,490 1,314,000 1,338,100 1,365,500 +24,100 +51,500
Reserve Components (RC)
Army Reserve 194,318 199,000 199,500 200,000 +500 +1,000
Navy Reserve 57,824 59,000 59,100 59,200 +100 +200
Marine Corps Reserve 38,682 38,500 38,500 38,500 -- --
Air Force Reserve 68,798 69,800 70,000 70,200 +200 +400
Army National Guard 343,603 343,000 343,500 344,500 +500 +1,500
Air National Guard 105,670 106,600 107,100 108,600 +500 +2,000
TOTAL RC 808,895 815,900 817,700 821,000 +1,800 +5,100
Army AC + RC 1,014,166 1,018,000 1,030,500 1,040,000 +12,500 +22,000
Navy AC + RC 381,768 386,900 394,500 404,000 +7,600 +17,100
Marine Corps AC + RC 223,196 223,500 224,600 224,900 +1,100 +1,400
Air Force AC + RC 497,255 501,500 506,200 517,600 +4,700 +16,100
TOTAL AC + RC 2,116,385 2,129,900 2,155,800 2,186,500 +25,900 +56,600
Major Investments in the FY 2019 Budget
9
FY 2018 Request FY 2019 Request
Qty $B Qty $B
Aircraft
F-35 Joint Strike Fighter (Air Force, Marine Corps, Navy) 70 10.8 77 10.7
KC-46 Tanker Replacement (Air Force) 15 3.1 15 3.0
F/A-18E/F Super Hornet (Navy) 14 1.3 24 2.0
AH-64E Apache Attack Helicopter (Army) 63 1.4 60 1.3
VH-92 Presidential Helicopter (Marine Corps) - 0.5 6 0.9
P-8A Poseidon (Navy) 7 1.6 10 2.2
CH-53K King Stallion (Marine Corps) 4 1.1 8 1.6
Shipbuilding
Virginia Class Submarine 2 5.5 2 7.4
DDG-51 Arleigh Burke Class Destroyers 2 4.0 3 6.0
Littoral Combat ships (LCS) 2 1.7 1 1.3
CVN-78 Class Aircraft Carrier 1 4.6 - 1.8
Fleet Replenishment Oiler (T-AO) 1 0.5 2 1.1
Towing, Salvage, and Rescue Ship (T-ATS) 1 0.1 1 0.1
Expeditionary Sea Base - - 1 0.7
Space
Evolved Expendable Launch Vehicle (Air Force) 3 1.9 5 2.0
Global Positioning System (GPS) (Air Force) - 1.1 - 1.5
Space Based Infrared System (Air Force) - 1.5 - 0.8
Numbers may not add due to rounding
(Base + OCO)
Includes Procurement and Research, Development, Test and Evaluation (RDT&E) funding
FY 2019 Budget
• Driven by the National Defense Strategy
• Improves the lethality and capability of the Joint Force
• Begins reforming DoD’s business operations by using best practices to centralize common services
• Needs Congress to pass this budget on time – end Continuing Resolutions
10
“This national defense strategy will guide all our actions, aligning the
department's three lines of effort to gain synergies. But we recognize no
strategy can long survive without necessary funding and the stable,
predictable budgets required to defend America in the modern age.”
– Secretary Mattis
Defense-Wide
Budget Perspectives
Ms. Monique Dilworth
Director, Operations
OUSD(C)
Defense-Wide Budget Update
• FY 2018 – Proposed additional funding resulting from the FY 2018 Bipartisan Budget Agreement
• O&M Flexibilities requested due to late arrival of funds
• Greater scrutiny on how we spend the additional funds
• Mid-year review coming soon!
• FY 2019 - Defense-Wide comprises 17%, or $115.8 billion, of the President’s Budget Request (includes base and OCO funding)
• Be able to make the link between your programs and the National
Defense Strategy
• O&M, Defense-Wide justification materials – good improvement!
Staffer days are coming up
• FY 2020 – What to expect:
• OMB initiative to move enduring OCO costs into the base budget.
• Greater use of data analytics during the Program Budget Review
2
Career Talk – OUSD(C) Needs You!
Immediate Supervisor is most important person at any point in
time. Move on and get a fresh start if the relationship is not
supportive
1. Write very well – even your emails! This will set you apart.
Find opportunities to write if your current job doesn’t require
much of it.
2. Produce high quality work 100% of the time! Know your stuff.
– Prepare documents that easily convey information to leadership.
– Make it easy for your leadership to understand (it’s not about you and how
smart you are). Always keep information concise and simple.
– The reward for good work is more work, but usually more interesting and
high visibility work!
3. Get along well with others! (inside and outside of your
organization)
– People are always watching. You are interviewing for your next promotion
on a daily basis.
Resumes – Avoid copying your position description!3
Defense-Wide
Budget Perspectives
Ms. Mary Ann McAfee
Associate Director, Investment (Ground/Sea/Other)
OUSD(C)
Congressional Update
Mr. Michael Benjamin
Associate Director, Budget Appropriations Affairs
OUSD(C)
Congressional Update
FY 2018/2019 Budget Deal
CR Expiration
FY 2018 Budget Briefings
FY 2018 Omnibus Timeline Challenges
FY 2019 Posture Hearings/Issues
Joint Select Committee on Budget Process Reform
Appropriations Leadership Changes
Another Continuing Resolution??2
Fourth Estate
Audit Update
Ms. Mobola KadiriDirector, Financial Improvement and Audit Readiness
OUSD(C)
DoD Consolidated Audit
• DoD has started its first full financial statement audit
o Select defense agencies and funds are subject to stand-alone audits
o Remaining defense agencies, activities and funds will be audited as part of DoD’s consolidated financial statement audit
• The ODCFO will represent management to the auditors, but all of the Fourth Estate will be subject to audit annually. We will be using auditor findings to measure progress at the accountable levels and provide feedback into senior executive/organizational assessments
2
DoD Consolidated Audit StructureComprised of Over 24 Stand-Alone Audits and an Overarching Consolidated Audit
3
DoD-Wide Consolidated Audit Performed by DoD OIG
Included in the Consolidated Audit
5% Budget, 3% Assets
Those DoD reporting entities not undergoing stand-alone
audits will be included in the consolidated audit.
DoD OIG will perform internal controls and substantive testing
over activities and balances.
Stand-Alone Audits
95% Budget, 97% Assets
DoD OIG (as the Consolidated Auditor) will assume responsibility for or make
reference to the audit opinions of each component auditor (performed by an
independent public accounting firm).
Army
General Fund
Air Force
General Fund
U.S. Army Corps
of Engineers –
Civil Works
Military
Retirement Fund
Medicare-Eligible
Retiree Health
Care Fund
DCAA
DFAS Working
Capital Fund
DHA-CRM
USTRANSCOM
USSOCOM
DoD Classified
DLA
Strategic
Materials
DLA
Working Capital
Fund
DLA
General Fund
DeCA
DHPDISA General
Fund
DISA
Working Capital
Fund
DoD OIG
Army Working
Capital Fund
Navy
General Fund
Navy Working
Capital Fund
Air Force Working
Capital Fund
U.S.
Marine Corps
General Fund
No Opinion Modified Unmodified
JCS
(incl. NDU)DTRADCMA
DARPADoDEAMDA
DAU
DHRA
OEADSS DTIC DMA
CBDP
DSCAWHS
Other TI-97 Funds
Provided to Army by
OSD
Other TI-97 Funds
Provided to Navy by
OSD
Other TI-97 Funds
Provided to Air Force
by OSD
DOTE DPAA DTSA DFAS GF MHPI
Burden Sharing
Account by Foreign
Allies, Defense
Support for U.S.
Relocation to Guam
Activities, Defense
Host Nation Support
for U.S. Relocation
Activities, Defense
DoD Education
Benefits Fund
Emergency
Response
Fund, Defense
Homeowners
Assistance Fund,
Defense
Mutually
Beneficial
Activities
Voluntary
Separation
Incentive
Trust Fund
Defense
Gift Fund
National
Security
Education
Trust Fund
Defense
Cooperation
Account
ODCFO Fourth Estate Audit Support &
Oversight - what’s new?• The ODCFO is performing additional functions in support of financial management operations and audit
regimen:
o Performing Fourth Estate financial statement review activities
o Developing tools, documentation and training
Universe of transactions
NFR tracking tool
o Instituting a risk based A-123 Program with additional emphasis on fraud as required by the OMB A123 and fraud reduction and data analytics act
o Monitoring resource allocation and oversight for remediation and sustainment
o Maximizing the use of Defense Agencies Initiative (DAI) capabilities
Focus on implementing existing DAI capabilities: budget formulation, direct treasury disbursing, and purchase request data standard/procurement data standard, acquire to retire (property)
Emphasis is on process standardization and efficiency
4
• Beginning with Q2 FY 2018 financial statement information, OUSD(C) FIAR will be performing new financial statement
analysis oversight procedures on ODO Financial Statements.
• AUD-IT will have the capability to produce the output referenced below by the end of Q2 2018
• ODOs will be expected to work with OUSD(C) FIAR to resolve issues identified during monthly tasks and document
and evidence quarterly fluctuations.
*For the purposes of ODO financial statement analysis tasks, variance analysis refers to the analysis of variances between accounting system detail and accounting system trial balances.
**For the purposes of ODO financial statement analysis tasks, fluctuation analysis of quarterly fluctuations in account balances from the previous quarter of the same year and the same
quarter of the previous year. Documentation of the analysis will include the business reasons for fluctuations.
Fourth Estate Financial Statement Review Activities
Header (Arial, 14 pt)
5
The ODCFO Auditable Universe of Data –
Intelligence Tool
• The Auditable Universe of Data – Intelligence Tool (AUD-IT) is a UoT tool that is being developed by ODCFO
• It is an integrated, web-based system that houses transactional data from all DoD accounting systems and major feeder systems that generate accounting events
• AUD-IT provides standardized and normalized UoT for Reporting Entities
• AUD-IT is being used to support audits of the Fourth Estate by:
– Reconciling financial statement data, including:
o General ledger details to the unadjusted trial balance
o Financial statement balances to adjusted trial balance to unadjusted trial balance
– Providing a universe of data for audit sampling and testing
6
As part of its oversight of the Fourth Estate, ODCFO will be responsible for
collecting, prioritizing, and assigning Fourth Estate findings
DoD Audit Feedback Cycle
7
Pre-
Planning
Phase
Planning
Phase
Internal Control
PhaseTesting Phase
Reporting
Phase
Each Organization
Collects and
Prioritizes Findings
Organization
Leadership
Assigns
Findings for
Action
Responsible
Parties
Develop and
Implement
Corrective
Actions
Planning
Phase
Internal Control
PhaseTesting Phase
Reporting
Phase
Year 1 Audit Year 2 Audit
Audit Finding
Audit Finding
Audit Finding
Auditor
Validates
Corrective
Actions and
Closes or
Reissues
Findings
Reissued Finding
A-123 Cycle
to Sustain
Closed
Fin
din
g
Audit
Finding
Audit
Finding
Applicable Stakeholders Support Remediation Efforts
Tracking significant audit findings allows senior leaders to hold responsible parties accountablefor addressing root causes of issues and closing audit findings
Audit Findings (NFRs) Status Reporting
Dashboards can be filtered by fiscal year, open/closed status, reporting entity, organization responsible for the finding, etc.
All Reporting Entities
All Fiscal Years
All Reporting Entities
(Notional)
Air Force
All Fiscal Years
0
500
Total
Closed Conditions by Fiscal YearAs of xx/xx/xxxx
FY2018 FY2019 FY2020 FY 2021
All Reporting Entities
0
500
Air Combat Command Air Education and TrainingCommand
Air Force Global StrikeCommand
Air Force Special OperationsCommand
NFRs Issued by Major CommandAs of xx/xx/xxxx
Issued Closed
0
200
400
Army Navy Air Force USMC Fourth Estate ServiceProvider
NFRs Issued by Material Weakness Area
Equipment Assets FBwT IT Financial Reporting
-10%
10%
30%
50%
FY19 FY20 FY21 FY22 FY23 FY24
% Closed NFRs at end of Fiscal Year
AF Army MC Navy 4th Estate Service Provider
0 200 400 600 800 1000 1200 1400
Equipment Assets
Fund Balance with Treasury
Information Technology
Other
Status of NFRs by MW Area
Open Closed
8
A-123 Program Strategic Approach: Shifting
focus from FY 2017 through FY 2018
Prior Approach Drive Strategy and Improvements Drive Sustainment
• Reliance on self-reporting of MWs from components.
• Limited oversight throughout FY from PSAs and SAOs to support Annual SOA
• Conduct comprehensive risk assessment and control identification to determine testing area focus in FY 2018.
• Perform testing of controls that are properly designed and remediation is complete.
• MW CAP tracking and progress reports
• Incorporate areas where remediation is complete into live A-123 Internal Control Program testing plans.
• Train (MICP Day) and develop and
distribute guidance/toolkits.
• Provided “high risk” areas for program
based on DoD-wide MW Areas reported
through FY 2016 AFR.
• Reconcile to DoDIG/GAO Audits
• Plan and execute control testing based
on risks and material weaknesses
reviews.
• Data calls to gather population of MWs
reported by DoD Components.
• Annual compilation and reporting of SOA
• Drive standardization on DoD-wide risk and
control deficiencies definition and
assessment criteria.
• Increase program management oversight
and ensure component coordination and
accountability.
• Routine monitoring of remediation efforts (prior NFRs and newly identified).
• Testing of key business processes by DoD
Components and by DCFO as assigned.
• Validate remediated material weaknesses.
• Routine monitoring of remediation efforts
• Annual testing within A-123 Internal
Control Program
• Maintain A-123 Internal Control
Program website with posted
toolkits
• Monitor milestone progress through
dashboards.
FY 2019 OutwardFY 2017 FY 2018
Goal: Strong Internal Control Environment
ProactiveReactive
Eval
uat
e “h
ealt
h”
of
the
curr
ent
co
ntr
ol
envi
ron
men
t ac
ross
Dep
artm
ent.
9
Financial Management
Workforce Update
Ms. Glenda Scheiner
Director, Human Capital and Resource Management
OUSD(C)
Financial Management Workforce Update
• Senior Leader Attendance at Outside Events Policy
• Direct Hire Authority Update
• Expeditionary Civilian Workforce
• Individual Development Plan (IDP) Pilot
• Instructor-led Virtual Training Pilot
• Coming Soon: FM STARs Pilot
2
Open Q & As