Morin paints challenging way ahead for Air Force's audit readiness

Thursday - 10/10/2013, 6:27pm EDT

Jason Miller, executive editor, Federal News Radio

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The Air Force is facing an ever increasing likelihood that it will not get its financial house in order by the first congressionally-mandated 2014 deadline.

By the end of this fiscal year, all of the Defense Department must be able to develop an auditable statement of budgetary resources.

But Jamie Morin, the Air Force's outgoing comptroller and President Barack Obama's nominee to be DoD's second director of the Cost Assessment and Program Evaluation (CAPE) office, told lawmakers Thursday the service would struggle to meet the 2014 deadline.

"[T]he Air Force is continuing to press forward aggressively on the 2014 and 2017 audit readiness timelines. Candidly, we lost progress last year due to a six-month contract protest that took our independent public accountant advisers out of work. So that was unfortunately timed and we've resolved it now. We have a contract awarded and IPAs, public accountants, on site helping us with certain tasks," Morin said during the Senate Armed Services Committee hearing on his nomination to lead CAPE and two others. "We've made some continued progress in identifying the actions we need to take in the near term with our existing legacy IT systems, our legacy financial systems, in order to give ourselves the best chance at meeting that 2014 deadline."

The Air Force awarded a $76 million deal to PricewaterhouseCoopers in August 2012. Kearney and Co. protested the award to the Government Accountability Office. GAO eventually decided in favor of the Air Force and PWC began work on the contract.

IT fixes not sustainable

But Morin said the changes to the Air Force's IT systems are not a sustainable long- term approach.

"[W]e will not have our objective future financial systems fully fielded by the 2014 deadline," he said. "So there is some risk in the 2014 deadline. Pressing aggressively on the 2014 deadline for the budgetary resources, though, has helped us significantly reduce the risk on that 2017 deadline for full financial readiness — audit readiness."

Morin said meeting the financial auditability deadlines remains an important priority for DoD and there has been real progress made over the last few years.

The Air Force's struggles are not new. Morin told lawmakers in 2011 that the Air Force's systems were among the biggest roadblocks it faces.

Lawmakers also pressed Jo Ann Rooney, the President's nominee to be the undersecretary of the Navy, on the service's ability to meet the congressional financial mandates.

Rooney said she didn't have details about the Navy's status in part because of the fiscal uncertainty that hasn't let the service hire skilled workers and plan accordingly.

Sen. John McCain (R-Ariz.) told Rooney to go back and figure out where the Navy stands on meeting the legal deadlines. He said if she doesn't know the answer, she isn't qualified to hold the undersecretary job.

Acquisition reform working

With the first deadline now less than a year away, lawmakers will pay close attention to DoD's progress, and want consequences should they miss the 2017 deadline to have an auditable financial statement.

Several members of the Armed Services Committee co-sponsor the Audit the Pentagon Act of 2013, introduced by Sens. Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.). The bill states that if DoD fails to obtain a clean audit opinion by 2018, the military services would be barred from spending money to fund new major acquisition programs beyond what's known as "milestone B" — in essence, the actual engineering and manufacturing of new systems.

On the House side, Reps. Barbara Lee (D-Calif.) and Mike Coffman (R-Colo.) introduced different companion bills.

The nomination hearing addressed a host of topics that Morin, Rooney and Michael Lumpkin, who would be the new assistant secretary of defense for special operations and low intensity conflict, would face in their new roles.

Lawmakers wanted assurances that DoD's acquisition process is improving.

In his new role as the director of CAPE, Morin will be responsible for developing cost estimates and overseeing programs to make sure they meet their cost goals. CAPE plays a big role in acquisition decisions so Congress is keen to know how DoD is buying better.

Sen. Carl Levin (D-Mich.) asked Morin whether DoD is changing how it buys and manages weapons programs after the passage of the Weapons Acquisition Reform Act in 2009.

"I've seen enormous progress inside the Department of Defense over the last four years," Morin said. "I was struck when I arrived in the Department of Defense by the degree to which the unification of the cost assessment and the program evaluation shops into CAPE had made a difference. Sen. McCain spoke at the outset about the degree to which we need the military services to be rigorous about cost estimates. And I've tracked that data, in fact, with regard to the Air Force and have found that over the last four years the range between independent cost estimates out of CAPE and the Air Force service cost positions coming out of the Air Force Cost Analysis Agency have narrowed significantly. It's a limited number of observations, so you can't do a lot of great statistics."