Bill puts contract spending on the hook if Pentagon misses audit deadline

Wednesday - 9/18/2013, 2:22pm EDT

New legislation introduced by Sens. Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.) aims to push the Pentagon toward being ready for a full financial audit by restricting spending on major weapons programs if DoD fails to get its books in order.

Coburn, who has introduced similar legislation in the past, said a full financial audit will help DoD better prioritize funding.

"This summer the Pentagon canceled important training and furloughed thousands of civilian personnel while it continued to waste billions on non-defense spending that had nothing to do with its core mission," he said in a statement. "A full and complete audit is the only way the department will be able to make better decisions about how it uses valuable taxpayer dollars."

Under the Audit the Pentagon Act of 2013, 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.

In addition, the bill would prohibit DoD from purchasing off-the-shelf IT systems if they would take more than three years to install. The bill would require DoD to include terms in its contracts allowing for the termination of IT system contracts that aren't delivered on schedule.

Congress has mandated DoD pass a full financial audit by the end of fiscal 2017. Meanwhile, DoD leadership has set an interim deadline to provide auditable Statement of Budgetary Resources — a full accounting of money flowing in and out of the Pentagon — by the end of 2014.

The Pentagon, which is responsible for more than half of the federal government's discretionary spending, has never achieved a full financial audit. DoD financial management has landed on the Government Accountability Office's High Risk List every year since the mid-1990s and is one of the issues preventing GAO from issuing an opinion on the entire federal government's financial books.

Last month, DoD's Deputy Chief Management Officer Beth McGrath told Federal News Radio the Pentagon is on track to meet both audit deadlines. McGrath said she and DoD comptroller Robert Hale are meeting with military components and defense agencies quarterly to go over their audit-readiness plans.

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