Washington, D.C. (July 13, 2023)—Rep. Robert Garcia, Ranking Member of the Subcommittee on National Security, the Border, and Foreign Affairs, and Rep. Kweisi Mfume, Ranking Member of the Subcommittee on Government Operations and the Federal Workforce, led Subcommittee Democrats in holding the Department of Defense (DOD) accountable for its repeated failures to achieve a clean financial audit.

“DOD should not get a free pass from the law, especially when other agencies that invest in priorities like health care, education, climate change, or economic growth are under high scrutiny and take important and difficult steps to comply with statutory auditing requirements,” said Ranking Member Robert Garcia in his opening statement.

“Like all the members on this Committee, I too support our troops and believe we have a solemn duty to ensure our nation is protected from increasing threats at home and abroad, but there has to be accountability to the American people.  And as it stands, correct me if I’m wrong, no one really knows how much waste, fraud, and abuse is at issue and whether this money could be spent on other crucial programs, critical outreach efforts, and critical communities all across the country,” said Ranking Member Kweisi Mfume in his opening statement.

The hearing included testimony from Mr. Brett A. Mansfield, Deputy Inspector General for Audits, Department of Defense; Mr. John M. Tenaglia, Principal Director, Defense Pricing and Contracting, Department of Defense; and Mr. Asif A. Khan, Director, Financial Management and Assurance, Government Accountability Office.

Subcommittee Democrats highlighted DOD’s responsibility to the military and taxpayers to achieve complete financial transparency.

• Ranking Member Mfume focused on how audits lead to “accountability, accountability, and more accountability,” which “fortifies our national defense.”  Ranking Member Mfume asked DOD for an update on its ability undergo an audit, questioning “where the deficiencies are, how to correct them and how to prevent them from happening again.”  In response, Mr. Khan cited cases where the attempted audit has uncovered additional weapons systems and resources.  Mr. Khan further outlined one specific instance where the audit discovered unaccounted for Blackhawk helicopters and missile mortars, saving the American taxpayers from buying the same equipment twice.

• Ranking Member Garcia highlighted the importance of reaching a clean audit to provide greater transparency and visibility to ensure all funds continue to be used as intended.  He also highlighted the “[s]ignificant amount of professionals working on the auditing of Ukraine.”  All three witnesses emphasized the many organizations and agencies DOD already works with to oversee aid to Ukraine, including more than 20 oversight groups with 15 inspectors general focused on ensuring all aid reaches the correct hands.

• Rep. Maxwell Alejandro Frost underscored that “audits are one of [Congress’s] best tools in ensuring oversight and accountability.”  He highlighted the length and breadth of DOD’s audit failures, highlighting that they only started attempting to undergo audits in 2018 and have yet to successfully complete an audit.  Rep. Maxwell Alejandro Frost also noted that DOD’s financial management has been on the GAO High Risk List since 1995.  Mr. Khan recognized the “pervasive” nature of the problem “across the DOD.”  Additionally, Rep. Maxwell Alejandro Frost pressed for a timeline of when DOD might receive a clean audit opinion to which Mr. Mansfield replied that DOD OIG targeted 2028.

Subcommittee Democrats called for modernized databases, stabilized leadership, and systems that better communicate reliable information within DOD.

• Mr. Khan highlighted challenges with DOD’s operation of nearly 400 separate financial management systems across DOD, noting that “they don’t communicate with each other, they don’t have controls, so the information does not pass from one system to another system reliably.”

• Congresswoman Eleanor Holmes Norton asked why modernizing these legacy systems is taking so long, despite DOD’s efforts to improve its financial systems environment for more than 30 years.  Mr. Khan responded, “This wasn’t a priority for DOD until the last 10 or so years.  DOD has many systems, but they are not meant to produce reliable financial information.  They were put into place to support the mission, logistics.  It’s only been in the last 10 to 15 years that they’ve realized that financial information is important to them primarily because of budget constraints.”

• Rep. Stephen Lynch noted that to succeed in fulfilling DOD’s force readiness mission, the Department requires “a good financial management team within DOD.”  Mr. Khan replied, saying that GAO found DOD did not conduct a “skill gap analysis for DOD to be looking to the future to develop their workforce of the future.”  Under DOD’s current conditions, Mr. Khan said it would be “difficult” for DOD “to develop the requirements, the skills that the people need to have for the future needs.”

• Rep. Summer Lee highlighted that DOD does not directly oversee or account for certain F-35 parts.  Mr. Khan explained that the Department’s lack of access to contractor information “severely impacts DOD’s ability to be able to provide accountability over those assets.”  Mr. Mansfield stated that DOD is taking action to improve “the clauses, the terms of conditions that go into contracts that communicate to contractors what the requirements are for property management and the government furnished property.”

After years of issues with auditability, Subcommittee Democrats emphasized that Congress needs to hold DOD to clear targets to achieve a clean financial audit.

• As Rep. Jasmine Crockett said, “If we know that the problem is that we have not modernized, what is the problem with modernizing?  Why can’t we?  Because it’s not for a lack of resources.  Is there anyone who can tell me why we cannot modernize, especially when we have the best military in this country, but we can’t figure out how to count our money and count our guns?” 

• Rep. Katie Porter highlighted that, “the winner here today should be the American people because no matter who uncovers the most waste, the important thing is that we provide long overdue oversight to the taxpayers.”

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