Como usar sbr file compare

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Further, in a February 2012 briefing on its accelerated plans, DOD indicated that 7 of 24 material general fund Defense Agencies and Other Defense Organizations are either already sustaining SBR audits or are ready to have their SBRs audited.20 These accomplishments represent important positive steps. Nevertheless, achieving audit readiness for the military components’ full SBRs is likely to poses significant challenges based on the longstanding financial management weaknesses and audit issues affecting key SBR assessable units. Our recent reports highlight some of the difficulties that the components have experienced recently related to achieving an auditable SBR, including:

• the Army's inability to locate and provide supporting documentation for its military pay;21 • the Navy's and Marine Corps' inability to reconcile their Fund Balance with Treasury accounts; • the Marine Corps' inability to provide sufficient documentation to audi

tors of its SBR.23 To achieve SBR audit readiness by 2014, DOD and its components need accelerated, yet feasible, well-developed plans for identifying and correcting weaknesses in the myriad processes involved in producing the data needed for the SBR. While DOD has developed an accelerated FIAR Plan to provide an overall view of the department's approach for meeting the 2014 goal, most of the work must be carried out at the component level. Army's Inability to Accurately Account for Military Pay

The Army's active duty military payroll, reported at $46.1 billion for fiscal year 2010, made up about 20 percent of its reported net outlays for that year. As such, it is significant to both Army and DOD efforts to achieving auditability for the SBR. For years, we and others have reported continuing deficiencies in the Army's military payroll processes and controls.24 Moreover, other military components such as the Air Force and Navy share some of these same military payroll deficiencies.

In March 2012, we reported that the Army could not readily identify a complete population of its payroll accounts for fiscal year 2010.25 DOD's FIAR Guidance states that identifying the population of transactions is a key task essential to achieving audit readiness. However, the Army and DFAS-Indianapolis (DFAS-IN), which is responsible for accounting, disbursing, and reporting for the Army's military personnel costs, did not have an effective, repeatable process for identifying the population of active-duty payroll records. For example, it took 3 months and repeated attempts before DFAS-IN could provide a population of servicemembers who received active duty Army military pay in fiscal year 2010. Further, because the Army does not have an integrated military personnel and payroll system, it was necessary to compare the payroll file to active Army personnel records. However, DOD's central repository for information on DOD-affiliated personnel did not have an effective process for comparing military pay account files with military personnel files to identify a valid population of military payroll transactions.

In addition, the Army and DFAS-IN were unable to provide documentation to support the validity and accuracy of a sample of fiscal year 2010 payroll transactions we selected for review. For example, ÕFAS-IN had difficulty retrieving and providing usable Leave and Earnings Statement files and the Army was unable to focate or provide supporting personnel documents for a statistical sample of fiscal

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Ledger.32 The DOD IG further stated that as a result, the Navy ERP System, which is expected to manage 54 percent of the Navy's obligation authority when fully deployed, might not produce accurate and reliable financial information.

Two ERP systems—the Army's General Fund Enterprise Business System (GFEBS) and the Air Force's Defense Enterprise Accounting and Management System (DEAMS)—are general ledger systems intended to support a wide range of financial management and accounting functions. However, DFAS users of these systems told us that they were having difficulties using the systems to perform their daily operations. Problems identified by DFAS users included interoperability deficiencies between legacy systems and the new ERP systems, lack of query and ad hoc reporting capabilities, and reduced visibility for tracing transactions to resolve accounting differences. For example:

• Approximately two-thirds of invoice and receipt data must be manually entered into GFEBS from the invoicing and receiving system due to interface problems. Army officials explained that the primary cause of the problem was that the interface specification that GFEBS is required by DOD to use did not provide the same level of functionality as the interface specification used by the legacy systems. At the time of our review, Army officials stated that they are working with DOD to resolve the problem, but no time frame for resolution had been established. • DEAMS did not provide the capability—which existed in the legacy systems—to produce ad hoc query reports that could be used to perform data analysis needed for day-to-day operations. DFAS officials noted that when DEAMS did produce requested reports, the accuracy of those reports was questionable. According to DFAS officials, they are currently working with DEAMS financial management to design the type of reports that DFAS

needs. While we were told that as of February 2012, the Army and Air Force had corrective actions under way to address identified deficiencies, specific timelines had not been developed so that progress could be monitored. 33

In February 2012, we reported that independent assessments of four ERPs—the Army's GFEBS and Global Combat Support System (GCSS-Army), and the Air Force's DEAMS and Expeditionary Combat Support System (ECSS)-identified operational problems, such as deficiencies in data accuracy, inability to generate auditable financial reports, the need for manual workarounds, and training 34 DOD oversight authority limited the deployment of GFEBS and DÉAMS on the basis of the results of the independent assessments. However, in June 2011, DOD authorized continued deployment of GFEBS and delegated further GFEBS deployment decisions to the Under Secretary of the Army.

In addition to functional issues, we found that training was inadequate. According to DFAS personnel as of February 2012, the training they received for GFEBS and DEAMS did not fully meet their needs. DFAS personnel informed us that the training focused on an overview of GFEBS and DEAMS and how the systems were supposed to operate. While this was beneficial in identifying how GFÉBS and DEAMS were different from the existing legacy systems, the training focused too much on concepts rather than the skills needed for DFAS users to perform their day-to-day operations. GAO has made prior recommendations to address these issues. DOD has generally agreed with these recommendations and is taking corrective actions in response. CHALLENGES IN DEVELOPING AND IMPLEMENTING DOD'S BUSINESS ENTERPRISE

ARCHITECTURE AND INVESTMENT CONTROL PROCESSES Improving the department's business environment through efforts such as DOD's business enterprise architecture and improved business systems management is an important part of helping DOD achieve auditability. In June 2011, we reported that DOD had continued to make progress in implementing a comprehensive business enterprise architecture, transition plan, and improved investment control processes.

35 However, we also reported that long standing challenges had yet to be addressed. Specifically, we reported that while DOD continued to release updates to its corporate enterprise architecture, the architecture had yet to be augmented by a coherent family of related subsidiary architectures.36 For example, we reported that while each of the military departments had developed aspects of a business architecture and transition plan, none of them had fully developed a well defined business enterprise architecture and transition plan to guide and constrain business transformation initiatives.37

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time fix. It is a manual work-around. It will not create continuing work for us. So it is something that we are planning for and that we have budgeted for, and we believe that is doable by 2014 and will not be something that will set us back going into 2017 at all.

Ms. COMMONS. For the Department of the Navy, we feel that the manual work-arounds will be at a minimum. First of all, our ERP is well-deployed. We only have two more commands that we are going to deploy, and we will have completed our program of record. What we are finding in our ERP is that the internal controls built into the system are, in fact, working. We tested some transactions in the system and we know that the controls around the system are fairly good.

Also, for our legacy systems, we have always built our transactions down at the transaction level. So we know we have some systems issues to work there, but we feel that we are working those issues and that we are moving forward in the right direction.

For our reconciliations, especially with FBWT, we are working with the DFAS to automate that process. It is a manual process at this point, but we think that we are making good progress and that we will be there within the timeframe for the auditable SBR, as well as 2017.

So we really believe that we are looking at our business processes end-to-end and that we are trying to make improvements in those processes for the long-term, not just to achieve an auditready SBR, but long-term improvement.

Senator McCASKILL. Secretary Hale?

Mr. HALE. If I could summarize, I would say that there will be some manual work-arounds. We see them as temporary. The General Fund Enterprise Business System (GFEBS), the Army system, for example. We have had some problems. We are doing some manual work-arounds. The Army is engaged, along with DFAS, in fixing the business process problems that led to those, and I expect that we will be back on track without manual work-arounds, I hope fairly quickly. As Dr. Morin said, there will be some issues the Air Force's DEAMS, because they will not have it in place, but they will get DEAMS at some point.

So I think yes for some, but I expect them to be temporary, and I would echo what was said here. We are not going to hire an army of auditors to do this manually. That is not sustainable and it is not our plan.

Senator McCASKILL. Do you think before 2014, Secretary Hale, that you are going to be able to put a figure on what the manual work-arounds for a 2014 deadline are going to cost over and above what we would be expending had the deadline not been moved?

Mr. HALE. We could try. I am reluctant to commit to that because it probably would not be as easy as it may sound.

Senator McCASKILL. No, I do not think it sounds easy. I think it sounds really hard.

Mr. HALE. I think it would be difficult.

Senator MCCASKILL. But the problem is if you do not do that analysis upfront, then you really are not making a sound management decision as to whether or not it is worth it to move up the date.

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As the military and the civilian forces downsizes, the Army anticipates making comparable reductions in numbers of contractor personnel. The reduced funding levels projected for the Army through 2017 will require deliberate and sustained planning and analysis to ensure that the Army's military, civilian, and contractor workforce is properly balanced, adequate, and affordable.

Additionally, you have asked for a cost comparison of contractor costs and military and civilian personnel costs. The CMRA data is what will allow the Army to make more accurate contractor cost comparisons with civilian and military personnel cost.

When comparing costs of military, civilian, and contractor labor, it is imperative to compare the fully-burdened costs to Department of Defense and the Federal Government, as opposed to base pay alone. As detailed in the Office of the Secretary of Defense's Directive Type Memorandum 09-007, dated January 29, 2010, a full cost comparison of total compensation, benefits, training, retirement, and other cost considerations must be utilized when making workforce mix decisions.

The fully-burdened costs of soldiers and civilians vary greatly because of factors like location, skill level, and years of service. The fully-burdened cost of an Active Army officer can range from $119,000 to $331,000 and the fully-burdened cost of an Active Army enlisted can range from $78,000 to $181,000. The fully-burdened cost of a General Service (GS) civilian can range from $33,000 to $202,000. For example, the average fully-burdened cost of an Active Army captain, pay grade 0-3, is $166,000, while the average fully-burdened cost of a rank equivalent civilian, a GS11, is $103,000. Contractor costs are even more variable and sensitive to factors such as location, type of service performed (e.g. Medical, Transportation, IT, etc.), skill level, availabilities due to different shifts, contractor leave policies, and overhead. To further complicate the comparison no direct military/civilian to contractor rank equivalency exists. The fully-burdened average unit cost of a Contractor ranges from $36,000 to $437,000. Therefore, any direct comparisons of military/civilian to contractor workforce cost should be addressed on a case-by-case basis.

Senator MANCHIN. Thank you, sir. Senator McCASKILL. Thank you. Senator Ayotte. Senator AYOTTE. Thank you very much, Madam Chair.

I wanted to ask all of you, we have seen with the General Services Administration (GSA) the rightful public outrage and outrage from this Congress about the misuse of taxpayers' funds, inappropriate use of taxpayers' funds for mind readers and all kinds of Things that is just completely unacceptable. Please tell me how we can assure that each of your departments has proper oversight and controls in place to make sure that that type of misuse of taxpayers' funds never happens within DOD, please.

Ms. MCGRATH. I will start. With regard to specifically the conferences, I can tell you that in the November timeframe, we completed a thorough review across DOD to ensure we had proper controls and policies in place for conferences, and each of the heads of components reviewed and attested to the Deputy Secretary that those were in place.

Following what I will call the GSA incident, we have gone back out to all of our heads of components in the military and actually across DOD to once again, look and to assure that they have proper controls in place to make sure we have not missed anything. We asked for a review of all conferences that have occurred in the last 2 years, and that is to be reported back to the Deputy Secretary on May 11. So we absolutely take this very seriously. Each of the components can attest to their specific actions and activities, if you like, but I can say that we are absolutely ensuring that we have proper controls in place so that things like that do not happen.

Mr. WESTPHAL. If I could, the Secretary of the Army issued a directive over a year ago on this matter which is to look at all of the conferences done by the Department of the Army, the costs, and to have a process by which conferences are approved. That was partly due to cost-cutting requirements that we had, but partly also to ensure that we were not doing anything excessive. So I think we can provide you that policy, that directive. I believe the Navy and the Air Force have adopted something similar.

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SECRETARY OF THE ARMY

WASHINGTON

MEMORANDUM FOR SEE DISTRIBUTION

SUBJECT: Army Directive 2011-20 (Department of the Army Conferences)

1. It is imperative that the Department of the Army exercise strict fiscal responsibility in planning and executing our programs and activities, including conferences. Changing the "business as usual” mindset as it relates to conferences is the right thing to do and is even more imperative in the current environment of declining resources. Simply put, we must implement more cost-effective and efficient methods to train, plan, collaborate and disseminate information. Experience has shown that conferences are an expensive means of accomplishing these goals. When it is determined that only a conference will suffice to accomplish official business, I will hold you accountable for ensuring that all conference-related events comply with law, regulation and policy and for exercising strict fiscal discipline in organizing and administering the conference.

2. The policy at enclosure 1 is effective immediately. It establishes conference approval authorities and applicability, defines key terms, clarifies processe's, further emphasizes the need to instill fiscal restraint throughout the Army and designates the Administrative Assistant to the Secretary of the Army as the proponent for conference policy. Applicable references, a template for conference requests, computation examples and the format for semiannual reporting are at enclosures 2 through 5, respectively.

3. In seeking to sponsor a conference, you will review and adhere strictly to all applicable law, regulation and policy, including the provisions of this directive. I charge each of you to consider how you can contribute to cost savings and the elimination of waste in conference planning. I expect you to disapprove conference requests that do not comply with this directive, and I have similarly instructed my Administrative Assistant for conferences submitted to her for approval.

4. This directive supersedes Army Directive 2011-05 (Department of the Army Conferences, Symposia, Seminars and Meetings), dated 20 April 2011, and rescinds DA Memo 1-17 (HQDA Conferences, Symposia, Seminars and Meetings), dated 15 November 2006.

5. Any questions regarding the enclosed policy and associated documents should be directed to the Office of the Administrative Assistant.

SUBJECT: Army Directive 2011-20 (Department of the Army Conferences)

DISTRIBUTION: Principal Officials of Headquarters, Department of the Army Commander

U.S. Army Forces Command U.S. Army Training and Doctrine Command U.S. Army Materiel Command U.S. Army Europe U.S. Army Central U.S. Army North U.S. Army South U.S. Army Pacific U.S. Army Africa U.S Army Special Operations Command Military Surface Deployment and Distribution Command

U.S. Army Space and Missile Defense Command/Army Forces Strategic Command

U.S. Army Network Enterprise Technology Command/9th Signal Command (Army)

U.S. Army Installation Management Command Superintendent, United States Military Academy Director, U.S. Amy Acquisition Support Center

CF: Commander, U.S. Army Accessions Command Executive Director, Army National Cemeteries Program Commander, U.S. Army Cyber Command Director, Army National Guard Director, Office of Business Transformation

1. Definitions. As defined by the Joint Federal Travel Regulations (JFTR)/Joint Travel Regulations (JTR), “conference is a meeting, retreat, seminar, symposium or event that involves attendee travel. It also includes training activities that are defined as a "conference" under the provisions of 5 CFR § 410.404. Events included in this definition normally require registration, an agenda, and scheduled speakers or discussion. The definition does not include:

• events necessary to carry out the statutory command and staff oversight functions

of the Department of the Army (DA), including investigations, inspections, audits or site visits;

Service-endorsed training that has been approved through the Army Deputy Chief of Staff, G-3/5/7; and

regularly scheduled courses of instruction conducted at a Government or commercial training facility (for example, courses scheduled via the Army Training Requirements and Resources System); however, this exclusion does not apply to courses held in a non-training commercial facility, such as a hotel or conference center.

For questions about whether an event is excluded, contact your Staff Judge Advocate or the Office of the Administrative Assistant. Requests for exceptions to policy should be submitted to the Office of the Administrative Assistant and must be fully justified.

2. Applicability. This policy applies to the Active Army, the U.S. Army Reserve, the Army National Guard of the United States' and those organizations for which the Secretary of the Army is the designated Department of Defense (DOD) Executive Agent and for which the Army funds their activities. This policy does not apply to conferences sponsored by a Combatant Command or subordinate unified command headquarters for which the Secretary of the Army has been designated the Combatant Command Support Agent.

3. General Responsibilities. Personnel will comply with law, regulation and policy applicable to conference planning, including the provisions for conference planning in the JFTRIJTR, specifically Appendix R (Conferences); DOD 5000.7-R (Joint Ethics Regulation (JER)); and all other pertinent regulations. Army personnel will familiarize themselves with these regulations and other travel policy guidelines before starting to plan a conference. Legal advisors in the Army ted to assist their clients by providing thorough, accurate and consistent legal reviews. Further, all personnel are expected to strictly apply sound fiscal principles throughout the conference planning and administration processes.

Except when the planned conterence will use State tunds only, all participants will serve only in a State status, and the conference will be planned and conducted on State time and address only State topics of Interest.

Enclosure 1 4. Procedures for Conference Requests

a. These conference request and approval procedures apply to all conferences sponsored or funded by any Army command, organization or activity, without regard to the approval authority of the conference. Approval authorities are defined in paragraph 8.

b. All conference requests will be signed by a general officer or member of the Senior Executive Service and staffed through the chain of command to the appropriate Conference Approval Authority defined in paragraph 8. The Army officials signing and coordinating on the conference request submitted to the Conference Approval Authority are attesting to the accuracy of the statements in the request, including the cost-benefit analysis and cost estimates. .

C. The sponsoring Army command, organization or activity will submit a complete and fully coordinated conference request through the appropriate command structure no later than 90 days before the start date of the conference. If the proponent expects to acquire contractor support and/or facilities contracts, the conference request must be approved before contract aw Each Army command, organization or activity may put in place additional timelines to meet their specific milestones for approval or acquisition requirements.

d. The template at enclosure 3 must be used for all conference requests. Failure to provide detailed information or explanations will result in disapproval of the request. Of particular note, requests shall provide:

(1) A breakdown of attendees, including the rationale and criteria applied to scope the attendee population and the justification for the number of attendees.

(2) Cost Information in accordance with Assistant Secretary of the Army (Financial Management and Comptroller) guidance, dated 17 May 2011 (available at http://ammypubs.army.mil/epubs/asa fmc collection 1.html). Specific cost elements are in the template.

(3) A detailed and credible cost-benefit analysis, which includes an explanation of other options considered (video teleconference, train-the-trainer and so on), as well as information on site selection. Conference requests must include a certifying statement that the travel is essential and the objectives of the conference cannot be satisfactorily accomplished less expensively by correspondence, Web-based communications, teleconferencing or other appropriate means. Additionally, the JFTRIJTR require all individual travelers to justify all travel with a statement on their DD Form 1610 (Request and Authorization for TDY Travel of DOD Personnel) or in the Defense Travel System (DTS) that the “Objective cannot be satisfactorily accomplished less expensively by correspondence, teleconferencing, Web-based communications or other appropriate means."

(4) A substantive agenda spanning the proposed conference from start to end; listing all planned speakers, programs, ceremonies and other activities; and specifying any after-hour events or activities. The agenda should provide planned or proposed locations for each event. Agendas that merely annotate “breakout sessions" are insufficient. If breakout sessions are planned, the agenda should explain the purpose and objectives of each breakout session.

(5) A conference security assessment that contains:

(a) A force protection assessment, including threat and vulnerability assessments for the conference facility site and any specific security requirements for the conference facility. For conferences held inside the National Capital Region (NCR), the Security and Safety Division (SSD-ATIFP), Office of the Administrative Assistant can assist with the assessment. For conferences outside the NCR, the local installation security or provost marshal office may provide technical expertise. Conferences held on Government or military installations may have different requirements than those in commercial facilities, so check applicable security regulations.

(b) A statement indicating whether foreign government representatives will attend the conference and, if so, a statement that the conference sponsor has coordinated the screening of foreign national attendees with the Deputy Chief of Staft, G-2 and will comply with all procedures set forth in AR 380–10 (Foreign Disclosure and Contacts with Foreign Representatives). Coordination with the Deputy Chief of Staff, G-2 typically requires 120 days leadtime before the conference date.

(c) A statement indicating whether the conference will involve classified information and, if so, the name and location of the secure U.S. military installation, other U.S. Government installation or cleared U.S. contractor facility where the conference will be held. Follow the procedures in AR 380–5 (Department of the Army Information Security Program) and coordinate directly with the Deputy Chief of Staff, G-2 if additional guidance is needed.

(6) A legal review that addresses all fiscal, ethics, contracting and travel issues, including a comprehensive assessment of whether the conference complies with applicable regulations and DA policy. This review should provide sufficient legal advice to the approving official to make an informed decision on approval. Any legal objections must be mitigated before submission of the conference request.

5. Selection of Conference Site

a. The first choice for conference locations must always be military installations or other Govemment facilities. Organizations will maximize the use of Government-owned or Goverment provided conference facilities. Military installations and Governmentowned facilities may not be ruled out as a conference venue solely because the facility is not available on the exact dates the sponsor desires to hold the conference; efforts must be made to adjust the conference scheduling to fit the availability of military or

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Government facilities, when possible. If scheduling cannot be adjusted, a detailed explanation must be provided in the conference request. Additionally, military or Government facilities may not be ruled out simply because they do not offer the same refreshments, food options or lodging availability as commercial facilities. Further, while planning the conference, the size of the conference should take into account the capacity of Government facilities; efforts should be made to contain the size of conferences to the capacity of military or Government facilities nearest the majority of local attendees.

b. Commercial facilities will be used only when they can be proven more economical, or when military or other Government facilities are unavailable when needed. If no military or Government-provided facility can meet conference requirements, the JFTRIJTR require that a minimum of 3 geographic sites be evaluated and considered for conferences with more than 30 attendees in a temporary duty (TDY) status before the selection of any 1 site for the conference, unless an overriding operational reason can be shown for holding the conference in a specific city.

C. Factors to be considered when determining a geographic location to conduct a conference include, but are not limited to:

(2) travel costs, including local travel and ground transportation;

(3) distance to the majority of attendees (if one area has a significant concentration of attendees, that location generally will be the most cost-effective option); and

(4) consideration of lower off-season rates or peak seasons.

d. Once a particular city is chosen as the site of the conference, a minimum of three facilities in that city will be considered to ensure full and open competition. Factors that should be considered when determining the venue to conduct a conference include, but are not limited to:

(1) participation in the Lodging Success Program (for more information, visit https://www.defensetravel.dod.mil/Docs/Fact Sheet Lodging.pdf):

(2) inclusion on the national list of approved accommodations maintained by the Federal Emergency Management Agency (the Hotel-Motel National Master List is available at http://www.usfa.fema.gov/applications/hotel/);

(3) willingness to exempt taxes for lodging;

(4) distance to the nearest major airport and free shuttle availability;

(5) cost of the venue (if commercial space is to be rented); and

(6) availability of rooms at the established per diem rate.

f. Each Army command, organization or activity will document, maintain and make available to The Inspector General or other interested parties a record of the conference site selection process, including the costs of each alternative site and venue considered.

g. All applicable local policies on site selection must be followed. For conferences to be held in the NCR, conference sponsors must coordinate through the Real Estate and Facilities Directorate, Office of the Administrative Assistant and obtain approval from the Director, Space Policy and Acquisition Division, Defense Facilities Directorate, Washington Headquarters Services to contract for short-term conference space inside the NCR.

n. In addition to cost considerations, the selection of the conference site must be sensitive to public perception. The conference sponsor should avoid the appearance that public funds are being expended in a careless, wasteful or unnecessarily extravagant manner. No venue, however, may be categorically prohibited from selection solely because of its reputation, location or amenities.

i. If a conference is justified as training and conducted on a recurring basis, the sponsoring command should seek to incorporate it into the institutional training domain, which includes Army centers and schools.

6. Cost. Contracting and Ethical Considerations. When a conference is determined to be necessary, the sponsoring command, organization or activity will adhere to strict fiscal controls and minimize costs. Accordingly, the conference sponsor must ensure the following:

a. The length of the conference is strictly determined by mission requirements. Socials, golf tournaments, military balls or other ancillary activities will not be held during regularly scheduled duty hours or used as a basis to extend personnel in a TDY status. Award ceremonies held during a conference often may be considered official business, but in no case should an award ceremony extend the period for which a conference attendee will be in a TDY status. For example, an award ceremony will not be held in the evening if it would result in the extension of a conference attendee in TDY status for an extra day or delay the attendee's return to his/her permanent duty station.

b. Conference attendees are limited to the minimum number necessary to accomplish the objectives of the conference. Accordingly, the sponsor must establish clear criteria for attendance and strictly limit the number of attendees.

C. Appropriated funds may not be used to purchase conference mementos to distribute to attendees.

d. in most cases, honorariums and fees for speakers are limited to $2,000 a speaker. Refer to DoD 7000.14-R (DoD Financial Management Regulation), Volume 10, chapter 12, paragraph 1208 (Payments of Fees for Guest Speakers, Lecturers, and Panelists) for specific guidance on speaker fees.

e. As a general rule, appropriated or nonappropriated funds are not authorized for refreshments. While serving light refreshments to conference attendees might be common business practice in private industry, and the JFTRIJTR authorizes light refreshments under very rare circumstances, Army policy is that appropriated or nonappropriated funds are not authorized to pay for light refreshments at Army-hosted conferences. Attendees may purchase refreshments at personal expense, which will not be reimbursable to the traveler by the Government. In some extenuating circumstances, a commercial facility may provide refreshments when such costs are both non-segregable from the cost of the facility rental (the cost of the rental is a fixed fee, which includes refreshments at no additional cost to the Government) and nonnegotiable (the facility will not negotiate to reduce the cost of the facility to the Government); however, this situation is rare. Non-segregable and nonnegotiable refreshments must be specifically addressed in the written legal review submitted with the conference request. Further, by signing the conference request, the signing official is attesting to the fact that the refreshments are truly non-segregable and nonnegotiable.

f. Lodging and meals will not be authorized or provided at government expense to local attendees (those not in TDY status). This restriction does not authorize selecting a location outside the local commuting area solely to provide Government-furnished lodging and meals.

(1) If meals are provided for personnel in a TDY status, the command or organization sponsoring the conference must identify the cost of each meal, whether included in a registration fee or contracted for separately; ensure that the appropriate proportional meal rate (PMR) is used; and issue a notice to all attendees to ensure that they correctly annotate travel vouchers. The cost of meals the Government provides must not exceed the per diem for that location. If a PMR is authorized, the cost of meals the Govemment provides plus the PMR must not exceed the per diem for that location. Examples are in enclosure 4.

(2) Special consideration should be taken when attendees include both local attendees and those in TDY status. Meal breaks should be given to allow both local attendees and travelers the opportunity to purchase meals, or local attendees may be offered the opportunity to personally purchase nonreimbursable meals being provided to travelers.

g. The JFTRIJTR specify the criteria under which an actual expense allowance (AEA) may be authorized. The competitive site selection process based on the JFTRIJTR should prevent the need for AEA except in very rare cases. If AEA is

authorized, it should be uniform (if possible) among personnel traveling at Govemment expense when they travel together or to the same location where AEA has been authorized. AEA should not be used to provide upgraded rooms or suites based solely on rank or grade. AEA is prescribed only on an individual trip basis and only after consideration of the existing facts of each case. Blanket authority prescribing an AEA for all travel to an area is prohibited, and AEA shall not be authorized as part of a "blanket” travel order.

h. Conference planners should request the tax exemption of lodging for Federal employees and/or servicemembers during the conference selection process. Contracting officers can often negotiate the tax exemption into commercial contracts. Any approval to hold a conference with a commercial lodging establishment that refuses to accept Federal employee and/or servicemember tax exemption must break out the cost of lodging-related taxes for the total number of attendees and include that amount in its cost calculation to achieve either the best value or lowest cost for the conference.

(1) All conference-related contracts must be signed by a warranted contracting officer or, when authorized, a Government purchase cardholder. When authorized and if the cost of the conference space is within the limits of the cardholder's purchasing authority, the Government purchase card may be used to rent conference space. Requirements will not be split to reduce costs to within the limits of the cardholder's authority. Personnel cannot make any commitment until a written agreement is signed by a warranted contracting officer or, when authorized, by a Government purchase cardholder. Support contractors are not authorized to enter into contracts on behalf of the Government for conference arrangements.

(2) An agreement signed by anyone other than a warranted contracting officer or, when authorized, a Government purchase cardholder, is an unauthorized commitment. A Government employee who lacks authority to bind the Government could be held personally liable if he/she signs an agreement for conference facilities or for other conference support. Additionally, Govemment employees are prohibited from directing or recommending that a support contractor take any action that purports to bind the Government in any way.

(3) A Goverment employee will not commit the Government to the use of any facility, sign any agreement or otherwise obligate the Government for conference facilities or support before approval of the conference by the conference approval authority. Personnel may visit facilities, discuss space needs, collect pricing and develop cost estimates, tentatively reserve space (only if at no cost and without any liability to the Government) or request other conference-related information. No contract or task order related to conference requirements will be awarded and no funds will be obligated for a conference until that conference has been approved by the Conference Approval Authority. This prohibition includes charges to be made using the Government purchase card.

(4) After the Conference Approval Authority approves the conference, the conference sponsor will forward documentation of the approval to the servicing resource manager and contract procurement activity. The conference sponsor must forward to the contract procurement activity a funding document indicating the availability of funds and a contract statement of work setting forth conference-related contract requirements. With a view to securing the best value, the conference sponsor must secure approval of the conference and forward funding and requirements documents in enough time to allow for competitive procurement of conference support and/or facility contracts. All contracts related to holding a conference (for example, facility contracts and conference support contracts) must be fully funded with the authorized Government appropriation before contract award. Recurring conferences must be included in the command, organization or activity budget. Conference planners must ensure that all conference funding complies with 31 U.S.C. $1341, 31 U.S.C. $ 3302 and DOD 7000.14-R.

7. Command Responsibilities

a. Appoint a conference manager, at the command or organization level (for example, Army command), who will be the primary point of contact for conferences, oversee the administrative and technical details of conferences and process conference requests requiring DA approval. The name and contact information of this individual must be provided to the Office of the Administrative Assistant and updated annually or as it changes.

b. On a semiannual basis, report to the Office of the Administrative Assistant conferences held during the reporting period. The first report is due no later than 15 May 2012 and will cover the period 1 October 2011 through 31 March 2012. The second report will be due no later than 15 November 2012 and will cover the period 1 April though 30 September 2012. Reports will be due by 15 May and 15 November each year thereafter. If a date falls on a weekend or holiday, the next normal workday is the due date. The format for reports is at enclosure 5.

C. Afteraction Reports. To accurately produce the semiannual report, the conference sponsor must forward an afteraction report to the appropriate Conference Approval Authority. Afteraction reports should be submitted 30 days after the completion of the conference and should include, at a minimum, the data elements needed to complete the report at enclosure 5.

a. The Administrative Assistant to the Secretary of the Army is the approval authority for all Army conferences that meet either of the following criteria:

(1) total conference costs (as detailed in enclosure 3) are greater than or equal to $500,000; or

Page 8

(2) the conference is held in conjunction with a non-Federal entity (NFE) with the following exceptions:

(a) conferences held in conjunction with representatives from foreign governments or international organizations are excluded, unless they meet the threshold in paragraph 8a(1); and

(b) conferences in which an NFE is competitively awarded a contract to support a conference sponsored or funded by an Army command, organization or activity are excluded unless they meet the threshold in paragraph 8a(1).

b. For conferences with total conference costs less than $500,000 and that are not held in conjunction with an NFE, as defined in paragraph 8a, the approval authority is commanders of Army commands, Army service component commands and direct reporting units for conferences sponsored or funded by their respective commands, organizations or activities. The Administrative Assistant is designated as Conference Approval Authority for conferences sponsored or funded by Headquarters, Department of the Army (HQDA) organizations and activities including the U.S. Army Acquisition Support Center).

C. The officials designated as Conference Approval Authorities in paragraph 8b may delegate their authority as follows:

(1) When conference costs are greater than or equal to $100,000 but less than $500,000, conference approval authority may be delegated in writing to the commander's principal deputy, provided that the principal deputy is a general officer or member of the Senior Executive Service, without the authority to redelegate. The Administrative Assistant may delegate this approval authority in writing to Principal Officials of HQDA, with the authority to further delegate to Deputy Principal Officials. For the National Guard, the Chief, National Guard Bureau may delegate to the Director, Army National Guard, who may delegate to the Deputy Director, Army National Guard, without the authority to further delegate.

(2) When conference costs are greater than or equal to $25,000 but less than $100,000, conference approval authority may be delegated in writing to the first general officer or member of the Senior Executive Service in the chain of command or supervision over the sponsoring command, organization or activity, without the power to further delegate. For HQDA, the Administrative Assistant may allow delegation of this approval authority in writing no lower than Deputy Principal Officials of HQDA, without the power to further delegate.

(3) When conference costs are less than $25,000, conference approval may be delegated in writing as determined by the Conference Approval Authorities designated in paragraph 8b.

d. No delegation of conference approval authority will take effect until a written copy of the delegation is provided to the Administrative Assistant for archiving. Notwithstanding any further delegation, the Conference Approval Authorities designated in paragraph 8b remain accountable for the acts and decisions of their delegates.

e. The designated Conference Approval Authorities may supplement this regulation and establish command and local forms. A copy of any such pplement or forms shall be provided to the Administrative Assistant before implementation.

a. Statutory Authority. Certain conferences and events sponsored by NFEs have statutory authority that authorizes specified DA support to these conferences and events. This policy does not apply to these conferences and events; see the JER and DoD Instruction 5410.19 (Public Affairs Community Relations Policy Implementation). For example, 10 U.S.C. & 2558 authorizes logistical and administrative support to certain national military associations for their annual national convention or conference. This support is limited to the following organizations and only for their annual national meeting, conference or convention:

(1) Adjutants General Association of the United States,

(2) Association of the United States Army,

(3) Enlisted Association of the National Guard of the United States,

(4) National Guard Association of the United States,

(5) Non-Commissioned Officers Association of the United States of America,

(6) Reserve Officers Association of the United States.

b. Cosponsorship. On occasion, an Army command or organization may cosponsor an event with an NFE. The Army is a cosponsor of an event when that command or organization is one of the organizations that develops the substantive aspects of the event or provides substantial logistical support for the event. All cosponsorship agreements must be reviewed by the sponsor's ethics advisor and forwarded to the Army General Counsel or his delegatee for approval in accordance with the JER. Further, in accordance with paragraph 8a(2), the Administrative Assistant to the Secretary of the Army is the sole approver of cosponsored conferences with NFEs.

(1) DA personnel may not endorse the NFE cosponsor(s) or its activities.

(2) DA personnel may not show preferential treatment to similarly situated NFEs that have a demonstrable interest in the subject matter of the conference.

(3) There must be no appearance that the NFE cosponsor's role in or support of the conference will improperly influence DA personnel in other official matters the NFE may have an interest in.

(4) The conference cannot be developed as a profit-making endeavor for the NFE cosponsor(s), including any vendor exhibition.

(5) When an Army command, organization or activity cosponsors a conference and the cosponsor incurs costs, the cosponsor is permitted to collect registration fees from non-Federal attendees to cover its costs. Cosponsors who collect fees from Army attendees or comingle fees collected from non-Federal and Ammy attendees will comply with the provisions implementing 10 U.S.C. $ 2262. If a graduated conference fee structure is used, no group will bear an unreasonable burden of the costs.

d. Army Conferences Held in Conjunction With NFE Events. Generally, the competition requirements of the JFTRIJTR as executed via the geographic and venue/facility selection criteria make it difficult to plan for concurrent or sequential but separate Army and NFE conferences. Those rare circumstances where this is permissible and practical require HQDA approval just as a cosponsorship would. Additionally:

(1) Army and NFE events will be separate and distinct events and will not be comingled. All Army activities, including awards ceremonies, outbriefings or in-progress reviews, will be held as part of the Army conference and will not be scheduled so that Army personnel must attend events hosted by an NFE. For example, Army conference activities will not bookend an NFE event.

(2) The Army conference will not be scheduled with a view to accommodating or benefitting the NFE. DA personnel will not endorse conferences sponsored by an NFE nor will DA personnel participate in NFE fundraising events, unless authorized under the JER or other applicable ethics standards.

(3) Holding an Army conference at the same location as an NFE event does not relieve the Army conference sponsor of the requirement to comply with applicable law, regulation and policy, including the provisions of this policy.

(4) NFEs may not provide services, facilities or support to an Army conference unless such support has been acquired through normal acquisition procedures or the event is a cosponsored event.

(5) DA logistical support, in the nature of DA personnel serving as speakers or panelists at conferences or other events sponsored by an NFE, will be kept to a minimum and must comply with the JER, chapter 3, section 2 (Official Participation in

Non-Federal Entities). DA will support events where only a limited number of DoD participants will appear on the same program. In such cases, the event must provide the best way to disseminate Army information, although speakers and panelists must take care to safeguard and prevent the dissemination of Army procurement, technological, classified and non-public information. NFE conferences or events at which the majority of speakers are Amy officials or other Army personnel are considered cosponsored conferences and must be approved in accordance with paragraph 8a(2).

a. Conference Fees. Title 10 U.S.C. & 2262 allows DA to collect fees in advance of a conference, either directly or by using a contractor, from individuals and commercial participants attending DA-sponsored conferences. Such fees may only be used to offset reasonable and allowable costs because fiscal limitations on the expenditure of appropriated funds for conference expenses apply to the use of collected fees.

(1) DA conference sponsors who use contractors, including those under no-cost contracts, to collect fees are permitted to structure such contracts to allow the contractors to offset from the fees collected the actual costs the contractor incurred (including its fee) to provide conference-related services. Contractor costs must be allowable costs authorized by the JFTRIJTR and other applicable regulations.

(2) Fees that exceed the costs of putting on the conference must be deposited in the U.S. Treasury as miscellaneous receipts. Excess fees may not be retained or used for any other purpose.

(3) In accordance with DOD 7000.14-R, Volume 12, chapter 32, all organizations are required to report the collection of conference fees. Conference sponsors should, therefore, contact their resource managers for further instructions.

b. Spouse Travel. As a general rule, spouses may not accompany DA military or civilian personnel on official business at Government expense. In addition, blanket requests for Government-funded spouse travel generally are not sufficient or acceptable. Commands must be able to demonstrate the requirement and benefit for each proposed spouse attendee. Policy for spouse travel is in DA Directive 2007-01 (Policy for Travel by Department of the Army Officials), 25 Jan 07.

C. Individuals Not Employed by the Goverment Participating in a DA-Sponsored Conference. When a DA conference sponsor determines that it is in the best interest of the Government to request an individual who is not employed by the Government, only intermittently employed by the Government as a consultant or expert in accordance with 5 U.S.C. & 5703, or serving without pay to lecture, instruct or give a demonstration or presentation, the individual may be reimbursed travel and travel-related expenses. In such cases, however, an invitational travel authorization must be issued in accordance with the JFTRIJTR, and travel must be arranged through a (Goverment contracted)

commercial travel office travel management center. An invitational travel authorization is not authorized for an individual merely to attend a conference sponsored by DA or an NFE. Support contractors may not make travel arrangements for such individuals, unless arrangements are made through an authorized commercial travel office/travel management center in accordance with the JFTRIJTR. Support contactors may not pay the travel expenses of such individuals and then be reimbursed these costs.

d Contractor Travel. Government contractor travel costs are governed by the rules in the Federal Acquisition Regulations. For these reasons, a contractor is not eligible for an invitational travel authorization in the execution of a contract.

e. Official Representation Funds. Any official representation funds requested to purchase meals or refreshments for authorized guests, such as congressional delegations or foreign dignitaries, must be approved under separate memorandum in accordance with AR 37-47 (Representation Funds of the Secretary of the Army).

91. The provisions of this policy are effective immediately. The HQDA proponent for this policy is the Administrative Assistant to the Secretary of the Army.

Page 9

1. Joint Federal Travel Regulations, Volume 1.

http://www.defensetravel.dod.mil/Docs/perdiem/JFTR(Ch1-10).pdf and http://www.defensetravel.dod.mil/Docs/perdiem/Appendices.pdf

2. Joint Travel Regulations, Volume 2.

http://www.defensetravel.dod.milDocs/perdiem/JTR(Ch1-7).pdf

3. DOD 5000.7-A (Joint Ethics Regulation (JER)), 23 Mar 06.

http://www.dod.gov/dodgc/defense_ethics/ethics_regulation/jer 1-6.doc

4. DOD 7000.14-R (Department of Defense Financial Management Regulation);

Volume 12 (Special Accounts, Funds and Programs); chapter 32 (Collection and Retention of Conference Fees From Non-Federal Sources), July 2009. http://comptroller.defense.gov/imr/12/12_32.pdf

5. DoD Instruction 5410.19 (Public Affairs Community Relations Policy

Implementation), 13 Nov 01. http://www.dtic.mil/whs/directives/corres/pdf/541019p.pdf

6. AR 37-47 (Representation Funds of the Secretary of the Army), 12 Mar 04.

http://amypubs.army.mil/epubs/pdf/R37_47.PDF

7. AR 380-05 (Department of the Army Information Security Program), 29 Sep 00.

http://www.apd.army.mil/paffiles/r380_5.pdf

8. AA 380-10 (Foreign Disclosure and Contacts with Foreign Representatives),

22 Jun 05. http://www.apd.army.mil/pdffiles/r380_10.pdf

9. Army Directive 2007-01 (Policy for Travel by Department of the Army Officials),

25 Jan 07. http://www.apd.army.mil/pdffiles/ad2007_01.pdf

10. Memorandum, Secretary of Defense, 27 Dec 10, subject: Consideration of Costs in

DoD Decision-Making https://dap.dau.mil/policy/Lists/Policy%20Documents/Attachments/3257/0SD14152 -10.pdf

11. Memorandum, SAFM, 17 May 11, subject: Guidance for Consideration of Costs in

Army Decision-Making. http://armypubs.army.mil/epubs/asa_fmc_collection_1.html)

Enclosure 2 12. 5 U.S.C. & 5703 (Per diem, travel, and transportation expenses; experts and

consultants; individuals serving without pay). http://www.law.cornell.edu/uscode/search/display.html?terms=5703&url=/uscode/ht ml/uscode 05/usc_sec_05_00005703----000-.html

13. 5 C.F.A. $ 410.404 (Determining it a conference is a training activity).

http://cpol.army.millibrary/permiss/78.html

14. 10 U.S.C. $ 2262 (Department of Defense conterences: collection of fees to cover

Department of Defense costs). http://www.law.cornell.edu/uscode/html/uscode 10/usc_sec_10_00002262----000.html

15. 10 U.S.C. & 2558 (National military associations: assistance at national

conventions). http://www.law.cornell.edu/uscode/html/uscode 10/usc_sec_10_00001588---000.html

16. 31 U.S.C. 81341 (Limitations on expending and obligation amounts)

http://www.law.cornell.edu/uscode/usc_sec_31_00001341---100-.html

17. 31 U.S.C. $ 3302 (Custodians of money)

http://www.law.comell.edu/uscode/html/uscode 31/usc_sec_31_00003302----000.html

18. DoD Preferred Commercial Lodging Programs.

https://www.defensetravel.dod.mil/Docs/Fact_Sheet_Lodging.pdf

19. Hotel-Motel National Master List.

http://www.usfa.fema.gov/applications/hotel

MEMORANDUM THRU (if applicable)

FOR (Approval Authority in accordance with Army Directive 2011-10)

SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event), (dates)

1. Event. (Insert name of sponsoring proponent) requests approval to conduct the (insert name of conference), (insert dates of conference), at (insert the location of the conference)

2. Purpose and Justification. Explain why the conference is being held; include any applicable regulations or directives. If the conference is being cosponsored, include a full explanation of what is being provided and exchanged. If the conference is in conjunction with a non-Federal entity, additional requirements apply (refer to Army Directive 2011-20, paragraph 9).

3. Cost-Benefit Analysis. Explain the benefits of holding the conference. Explain why lower cost alternatives such as teleconferencing, video conferencing or Web conferencing were not feasible and include any cost savings features from previous conferences. For any conference requiring travel, include a certifying statement that the objectives of the conference cannot be satisfactorily accomplished less expensively by correspondence, teleconferencing, Web-based communications or other appropriate

4. Analysis for Location Selection. Military installations or Government-owned or leased space must be considered first. Clearly demonstrate efforts to first secure military or Government space. For conferences with 30 or more attendees, state the three geographic locations surveyed and provide the rationale for the selected location. (For example, you should demonstrate where the majority of your attendees are traveling from and why the geographic location is most cost-effective.) Then clearly identify the three venues considered, including costs and any other factors used in the selection. If using commercial space within the National Capital Region (NCR), you must request approval from Washington Headquarters Services, Defense Facility Directorate, Space Policy and Acquisition Division and include the division's approval as an enclosure to the conference request.

5. Attendees. Provide information on your expected attendees (for example, all general officers in the medical profession on the East Coast). Include what measures have

OFFICE SYMBOL SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event), (dates)

been taken to discipline attendance to ensure the minimum number of attendees. Then, complete the following chart for your expected attendance.

Number of military attendees Number of DA civilian attendees

Number of contractor attendees

Number of all other attendees (describe status and role in conference-statutory volunteers, etc.) Number of foreign government attendees

GRAND TOTAL

Number of local attendees (i.e., those not on TDY orders – usually traveling from within the local commuting area) Number of Army-funded attendees (either centrally or command- funded). Number of spouses traveling at Government expense (additional approval required)

6. Security. Provide contact Information for the security office handling this conference. State the classification of the conference and certify that the procedures outlined in AR 380-5 (Department of the Army Information Security Program) have been followed, if applicable. If any personnel from a foreign government are attending or if any classified information will be discussed, certify that coordination has been done with the Office of the Deputy Chief of Staff, G-2 (DAMI). You must enclose a conference security assessment, Including threat and vulnerability assessments for the conference facility site and any specific security requirements for the conference facility, with your conference request. If the facility has not been selected at the time of the request, include as much information as is known.

7. Funding and Contracts. Clearly explain how the conference is funded. Explain who is paying for all costs associated with the event and what funding source they are using (e.g., regular Operation and Maintenance, Army; official representation funds (ORF): registration or exhibit fees; or any other Government agency funds). Include funding from both the conference proponent and attendees' organizations. For example, state

OFFICE SYMBOL SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event), (dates)

whether attendees' organizations are funding travel and reimbursable registration fees. (A full explanation of registration fees should be included in paragraph 10.) If applicable, state the amount of ORF being requested and the date the ORF packet was submitted or will be submitted in accordance with AR 37-47 (Representation Funds of the Secretary of the Army). If the contract vehicle is known, include details. Enclose with your request any vendor proposal documents that will be relevant to decisionmaking.

8. Meals and Incidental Expenses. State whether any meals will be provided at Government expense in lieu of per diem. State the cost of each meal (including gratuity and applicable taxes) per person. (For example, each day attendees will be provided breakfast, lunch and dinner at the following costs: B = $#/person, L = $#/person, D = $#/person OR conference attendees will be provided lunch each day at $#/person). If a Govemment-furnished meal is provided, the proportional meal rate (PMR) applies to military personnel and DA civilians for each day meals are furished. Further, you must demonstrate that the cost of the Government-furnished meals plus the PMR does not exceed the per diem for the locale. If meal breaks are worked into the agenda and attendees will purchase all meals with their provided per diem or optional nonreimbursable registration fee, please indicate "No Government-furnished meals." In the "Estimated Cost" table in paragraph 12, you will need to show the calculations of meals and incidental expenses (M&IE) and Government-furnished meals to make sure attendees are given the proper M&IE rate. Travelers are authorized 75 percent of M&IE on their departure and return dates (that is, travel days).

9. Refreshments. Refreshments are a personal expense and will not be provided at Government expense. Conference planners may offer attendees the opportunity to purchase refreshments as a personal expense not reimbursable by the Government. On rare occasions refreshments are both non-segregable (not identifiable as a separate charge in the facility costs) and non-negotiable (that is, the facility will not reduce the cost of the venue if refreshments are refused). However, this situation is rare, and by signing the conference request, the submitting official is attesting to the fact that the refreshments are non-segregable and nonnegotiable.. Any refreshments provided must be specifically addressed in the written legal review submitted with the conference request.

10. Fees. State whether a conference registration fee or exhibitor (vendor) fee will be collected; state the amount of the fee being collected for each person or vendor, and list all expenses and costs covered by the fee. Collection of fees must be conducted as permitted by applicable law, regulation and policy. Any conference or exhibit fee must be explicitly addressed in the written legal review submitted with the conference

Page 10

OFFICE SYMBOL SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event), (dates)

request. Please ensure that you refer to the policy document for additional requirements govering fees.

11. Honorariums or Speaker Fees. State whether or not honorariums or speaker fees will be paid and the cost paid for each speaker. In general, fees are limited to $2,000 a person, but refer to your command policy and/or DOD 7000.14-R, Volume 10, chapter 12, paragraph 1208 (Payments of Fees for Guest Speakers, Lecturers, and Panelists) for more information.

12. Estimated Costs. State the estimated costs for all expenses listed in the table and show all calculations; examples of appropriate remarks and calculations are provided. Costs should include any Army funds to be expended, whether by the conference proponent or attendees' commands or organizations.

OFFICE SYMBOL SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event), (dates)

OFFICE SYMBOL SUBJECT: Request Approval to (Sponsor or Cosponsor) the (insert name of event). (dates)

Expense Personnel and associated costs

Estimated Cost

Any Applicable Remarks Provide estimated military/DA civilian personnel costs associated with coordinating, preparing and executing conference. Include any lodging or transportation required to plan and execute the conference (i.e., site visits). DO NOT include the personnel costs (salaries and benefits) of those attending the conference, other than support staff. For assistance with personnel rates and calculations, refer to https://www.cape.osd.milcostguidance/). $

13. Point of contact. (Provide organization contact information: name, phone number, email address.)

(reviewing official signature block)

NOTE: The following items must accompany this request: 1. Conference agenda 2. Legal review 3. WHS approval (for those using commercial space in the NCR) 4. Security review 5. Vendor proposals (if any)

COMPUTATION EXAMPLES OF PROPORTIONAL MEAL RATE (PMR)

The total amount paid by the Government for meals cannot exceed the locality meal rate. Therefore a conference sponsor must make sure the total amount to be expended for Government-provided meals and reimbursed as PMR is within the locality meal rate. This cost limitation makes it very difficult for a conference planner to provide Government-fumished meals, especially at a commercial establishment, and remain within the locality meal rate. Computations are done on a daily basis.

Example: A conference sponsor is planning to hold a conference at a location where the CONUS rate for meals and incidental expenses (M&IE) is $46. The $46 consists of $41 for meals and $5 for incidental expenses. The conference sponsor wants to provide breakfast on the 2 full days of temporary duty (TDY) and a dinner on the second day of TDY. The cost of breakfast for each person for each day is $7. The cost of dinner for each person is $36.

The tool at http://www.defensetravel.dod.mil/site/perdiemCalc.cfm provides the necessary information to find the applicable meals rate and PMR. The chart is applicable to this example. Note "Local Meals" is the full per diem rate and "Prop Meals" is the PMR.

Part 1: Determine How Much the Conference Sponsor May Spend for Meals

Once the PMR is identified, the conference sponsor must determine whether the cost for meals plus the PMR exceeds the meal rate. If the cost for meals plus the PMR exceeds the meal rate, the conference sponsor is unable to contract for meals at the proposed costs. In the example, the meal rate is $41.

Enclosure 4 For the first day of TDY, the conference sponsor wants to provide breakfast at a cost of $7 a person:

For the second day of TDY, the conference sponsor wants to provide each attendee breakfast at a cost of $7 and also dinner at a cost of $36:

Page 11

EXAMPLE: Provide a description of the conference and its

purpose.

w NFE? Spouse Conjunction

Gov-funded Event Event End

Start Date Dato Actual # of Local Actual (include(Include Sto? Attendees Attendees cost travel day travel day Dorcription of Event Travel? Hold on Gontor Mitary

Army Conference Semiannual Report (name of command, org, or activity)

(Dates covered by report)

a Activity Event Name Location Organization

Mr. WORK. In May 2012, the Office of Management and Budget (OMB) released a memorandum to promote further efficiency and cost consciousness and directed the government to reduce cost and improve efficiencies in areas such as travel and conferences. The Department of Defense (DOD) issued amplifying guidance that directed the heads of each component or service to review all conferences that their organization was hosting or sponsoring. In June 2012, the Department of the Navy, in response to the OMB and DOD guidance, issued the attached updated conference guidance and data call.

References: (a) OSD memo "Implementation of May 11, 2012, Office of Management

and Budget Memorandum, ‘Promoting Efficient Spending to Support

Agency Operations'” of June 3, 2012 (6) OMB memo M-12-12 of May 11, 2012 (C) ALNAV 072/11

(d) DON/AA memo of January 31, 2012 (NOTAL)

Reference (a) provides initial guidance for implementing those portions of reference (b) that concern conference planning and accountability.

The conference approval authorities identified in paragraphs 3A(1) and 3B of reference (c) are rescinded. Until further guidance is published, conferences estimated to cost over $500,000 must be approved by the Deputy Secretary of Defense (DEPSECDEF), and conferences costing between $100,000 and $500,000 must be approved by the Office of the Secretary of Defense Deputy Chief Management Officer (OSD DCMO). Department of the Navy (DON)-sponsored conferences costing less than $100,000 in DON funds will continue to be approved per paragraphs 3A(2) and 3C of reference (c) and reference (d), subject to the temporary restrictions described below.

Reference (a) directs a review of all upcoming conferences that the DON is hosting or sponsoring, or that DON employees will be attending, where expenses to the Department of Defense (DoD) are likely to exceed $100,000. To accomplish this task, provide the following information to the Department of the Navy Assistant for Administration (DON/AA) by July 5, 2012.

1. Complete attachment (1) for all upcoming conferences (as conferences are defined in paragraph 6 of reference (c)) that are being hosted or sponsored by the DON where expenses to DoD are likely to exceed $100,000.

• This includes conferences planned but not yet approved, and

conferences that are approved but have not been held.

• Conference expenses include attendee registration fecs, attendee travel

SUBJECT: Updated Guidance and Data Call on Conferences

• Attendees include both Navy and Marine Corps personnel, as well as

DON civilian employees.

2. Using attachment (2), list all conferences that DON employees in your immediate and subordinate organizations plan to attend. Include those being hosted by the DON, another government agency (Department of the Army, General Services Administration, etc.), or a non-Federal entity. Addressees must aggregate the estimated travel and per diem costs by conference,

A cover memo must accompany attachments (1) and (2) stating that the included conferences significantly advance the DON's mission, and that expenses and activities associated with these conferences comply with all applicable travel, conference, and acquisition regulations. A sample cover memo is at attachment (3).

I will forward the results of the review to OSD DCMO. Planning for all conferences may continue, but until this review is completed and transmitted to DCMO, the following rules apply:

Conferences for which funds have been obligated, e.g., approved travel authorizations, signed contracts, signed no-cost contracts, will be executed as approved.

• Conferences for which no funds have been obligated, even if approved

prior to June 3, 2012, arc on hold but planning should continue.

• If total DON expenses will exceed $100,000 for any conference hosted

or attended by DON employees, travel authorizations will be suspended pending notification to OSD DCMO.

• Any conference not approved before June 3, 2012 and estimated to cost

between $100,000 and $500,000 must be submitted through the chain of command for approval by OSD DCMO.

• Any conference not approved before June 3, 2012 and estimated to cost

over $500,000 must be submitted through the chain of command for approval by DEPSECDEF.

Semi-annual reports are required. Complete the semi-annual report, attachment (4) for conferences held by addressees or their subordinates. The first report covers the

SUBJECT: Updated Guidance and Data Call on Conferences

period September 21, 2011 through March 31, 2012, and is due to the DON/AA on July 30, 2012. The second report, covering the period April 1, 2012 through September 30, 2012, is due November 1, 2012.

The shortest path to reestablishing reasonable DON approval authorities is to rapidly provide accurate data. I am confident in your full cooperation in this effort.

Questions may be addressed to Joy Douglas, , (703) 6926684 or Sharon Williams, , (703) 693-0991.

Attachments: 1. Brief Sheet for a Conference Hosted 2. List of Conferences to be Attended 3. Sample Memo 4. Semi-Annual Report

Distribution: ASNs GC DNS DMCS DONAA

Brief Sheet for a Conference Hosted or Sponsored by DON Where Expenses are likely to Exceed $100,000 DON-Wide

Item 1 Submitting Organization 2 Conference Tiede

6 Frequency of Conterenca

Days, including travel days.

Facility (include whether facility is a 8 military installation, government

building, hotel, etc.)

Is an NFE involved? If yes, specify in "Notes/Comments" column.

Planned Number of Attendees by 10

the categories indicated

Lodging (Indicate if gov't provided lodging or it was within per dien.)

Total Travel Total Per Diem Conference Fots Facility Rental Contractor Support Planning Costs (salaries, travel, etc.) Other (specify, add lines as necessary) Total DON Costs (excl. attendee salaries)

Page 12

MEMORANDUM FOR DEPARTMENT OF THE NAVY/ASSISTANT FOR

ADMINISTRATION

SUBJECT: Updated Guidance and Data Call on Conferences

Reference: (a) UNSECNAV memo of June X, 2012

Attachments (1) and (2) are forwarded in response to reference (a).

I certify that the conferences reflected in the attachments significantly advance the Department of the Navy's mission, and that the expenses and activities associated with these conferences comply with all applicable travel, conference, and acquisition regulations.

Attachments: 1. Brief Sheet for a Conference Hosted 2. List of Conferences to be Attended

Conferences).

Mr. MORIN. See attached memo (28 Oct. 2011 Air Force POlicy Memorandum,

This is an Air Force Policy Memorandum immediately implementing updated Air Force policies regarding the processing and approval of requests from Air Force organizations to hold conferences. Compliance with this Memorandum is mandatory. It applies to all conferences sponsored, co-sponsored or funded, in whole or in part, by Air Force offices or organizations, including Air Force Reserve and Air National Guard organizations, when appropriated funds are used. To the extent its direction is inconsistent with other Air Force publications, the information herein prevails, in accordance with AFI 33-360, Publications and Forms Management.

The Air Force remains committed to the efficient stewardship of public funds when it comes to planning and executing conferences. All Air Force-sponsored or funded conferences must be necessary for mission accomplishment, must be the product of sound and comprehensive cost analysis and must stand up to scrutiny, particularly with respect to our fiscal responsibilities. We must avoid both actual and perceived careless, wasteful or extravagant expenditures. To this end, attached is a re-statement of the Air Force's policy and guidance on conference planning and approval. The Administrative Assistant to the Secretary of the Air Force (SAFIAA) is designated as the Air Force point of contact for conference-related policy.

Ensure all records created as a result of processes described in this Memorandum are maintained in accordance with AF Manual (AFMAN) 33-363, Management of Records, and disposed of in accordance with the Air Force Records Disposition Schedule (RDS) located at https://afrims.amc.atimill.

The policy and guidance in this Memorandum becomes void after 180 days have elapsed from the date of this Memorandum, or upon release of an Air Force publication incorporating the policy and guidance, whichever is earlier.

Attachment: Air Force Policy on Conferences

AIR FORCE POLICY ON CONFERENCES

Conferences continue to draw great interest and scrutiny. In our continuing effort to ensure appropriate fiscal responsibility for planning and conducting conferences hosted or funded by Air Force organizations, the following is provided as an update of Air Force policy in this area. When it is determined that only a conference will suffice to accomplish official business, conference planners and senior leadership must ensure that conferences are planned and conducted in accordance with this policy.

1. Appendix R of the Joint Travel Regulations/Joint Federal Travel Regulations (JTR/JFTR)

provides Department of Defense (DoD) policy and perspectives regarding conferences, particularly regarding conference planning. Appendix R includes a reminder that “the public interest requires that Uniformed Services and DoD agencies exercise strict fiscal responsibility when selecting conference sites” ... so as to “minimize conference costs." It also provides that when DoD personnel attend conferences sponsored by others, representation should be kept to a minimum “consistent with serving the public's interest." Conference planners must familiarize themselves with applicable DoD and Air Force regulations and travel policy guidelines before starting to plan a conference. Conference planners and approval authorities should also refer to Appendix R for the factors to be considered in planning and approving conferences that will be supported in whole or in part with Air Force funds.

2. Conference defined. The JTR/JFTR broadly defines a “conference“ as a “meeting, retreat, seminar, symposium or event that involves travel."

This desinition includes events that are training activities under 5 Code of Federal Regulations 410.404, but not "regularly scheduled courses of instruction conducted at a Government or commercial training facility." In recognition of the fact that a number of gatherings necessary to carry out official

business might otherwise fall under the broad JTR/JFTR definition, “conference” has

decision-making events not considered to be “conferences" are Air Force Corporate

Events that may otherwise fall outside the desinition of a “conference" may fall

characteristics of a “conference. These include registration, a published substantive

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2. Other off-base conferences. The levels of approval authority currently enumerated in paragraph 10.2.5 of AFI 65-601, Voluine I are hereby modified.

For conferences held off Air Force installations (whether at another Government facility or a commercial venue) with total anticipated conference costs less than $500,000. (and not otherwise meeting the criteria of Paragraph 1 above), the approval authority is established at the following levels. Unless otherwise indicated, this authority may not be further re-delegated.

o For the Secretariat: SAF/AA; o For the Air Staff and other National Capital Region (NCR) organizations:

requests will be processed through the Assistant Vice Chief of Staff

(AF/CVA) and the Vice Chief of Staff (AF/CV) for approval by SAFIAA; o For the MAJCOMS and subordinate organizations: the MAJCOM vice

commanders (CV). This authority may be delegated by the MAJCOM/CV to

Numbered Air Force commanders for wing-level events only; o For Field Operating Agencies: the HQ USAF two-letter office having

oversight of the activity; o for the USAF Academy: the Superintendent; and o For AFOTEC: the Commander.

3. Other on-base conferences. Requests to hold conferences on Air Force installations (and not

otherwise meeting the criteria of Paragraph 1 above) will be routed through the installation commander for coordination before being sent to the appropriate approval authority. The authorities listed in Paragraph 2 above also act as the approval authorities for conferences being hosted or sponsored on Air Force installations.

1. Excepi where preliminary approval is given, no funds may be obligated or otherwise

committed for conference facilities or other conference-related expenses before approval authority review and action is obtained.

Approval of a prior year conference does not suffice as approval in subsequent years. Due to changes in costs, focus, needs, and availability of resources, each event must be evaluated on its own merits.

Where retention of a commercial conference planner/coordinator is contemplated,

2. Conference requests must be signed by a general officer (GO) or member of the senior

executive service (SES) as an affirmation of compliance with DoD and Air Force policy prior 10 routing the request through command channels for review and approval.

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CONFERENCE REQUEST - PRELIMINARY APPROVAL (Use additional pages as necessary – reference paragraph number/title being continued)

1. REQUESTING COMMAND/ORGANIZATION:

5. CONFERENCE MISSION PURPOSE / JUSTIFICATION (be specific, cite tangible

benefits):

6. WHAT ALTERNATIVES TO A CONFERENCE WERE CONSIDERED AND WHY WAS

EACH FOUND NOT ACCEPTABLE FROM A MISSION PERSPECTIVE?

7. PROPOSED LOCATION (CITY/STATE - if known):

8. PROPOSED VENUE (COMMERCIAL) (GOVERNMENT) (If known be as specific as

possible):

9. HOW HAS THE "LOCAL FIRST” POLICY ON GOVERNMENT TRAVEL AND

CONFERENCE-RELATED SPENDING BEEN CONSIDERED/MPLEMENTED?

10. IF PROPOSED VENUE IS NOT A GOVERNMENT OWNED OR PROVIDED

LOCATION, WHAT STEPS HAVE BEEN OR WILL BE TAKEN TO SECURE SUCH A LOCATION? IF NONE AVAILABLE, WHY?

11. PROPOSED PARTICIPANTS (Indicate range of grades of participants and initial estimate of numbers): MILITARY ATTENDEES:

• GE OFFICERS: DOD CIVILIAN ATTENDEES:

• POLITICAL APPOINTEES:

• SES: DOD CONTRACTOR ATTENDEES: NON-DOD ATTENDEES: OTHER INVITEES:

12. WILL REQUEST INCLUDE SPOUSE TRAVEL FUNDED AT GOVERNMENT

EXPENSE? (If yes, indicate number of spouses to attend and provide justification for their attendance.)

13. WILL CONFERENCE BE HELD IN CONJUNCTION WITH OR BE CO-SPONSORED

BY A NON-FEDERAL ENTITY OR OTHER GOVERNMENT ORGANIZATION? (If yes, provide available details on proposed co-sponsorship arrangement)

14. WHAT IS THE PROPOSED/DRAFT AGENDA (Be as specific as possible):

15. ESTIMATED TOTAL COST (Initial estimate):

Travel: Lodging: MI&E: Other Costs (Function space, audiovisual, facilitator):

16. RESULTS OF INITIAL COST-BENEFIT ASSESSMENT (Use tool at:

https://www.cape.osd.mil/costguidance/ ):

17. IF THIS EVENT HAS BEEN HELD IN PRIOR YEARS, WHEN WAS IT LAST HELD,

WHAT WERE TOTAL COSTS AND HOW WILL THE PROPOSED EVENT DIFFER? WHAT STEPS HAVE BEEN TAKEN TO ENSURE ECONOMIES/COST SAVINGS OR COST REDUCTIONS?

18. WILL A CONFERENCE PLANNER OR COORDINATOR OR SIMILAR COMMERCIAL

SOURCE OF SUPORT BE ENGAGED? (Describe expected duties and projected costs)

19. OTHER PERTINENT INFORMATION:

REQUEST MUST BE SIGNED BY A GENERAL OFFICER OR SES

CONFERENCE REQUEST - FINAL APPROVAL [Use additional pages as necessary – reference paragraph number /title being continued]

1. REQUESTING COMMAND/ORGANIZATION:

5. CONFERENCE MISSION PURPOSE / JUSTIFICATION (be specific, cite tangible

benefits):

6. WHAT ALTERNATIVES TO A CONFERENCE WERE CONSIDERED AND WHY

WAS EACH FOUND NOT ACCEPTABLE FROM A MISSION PERSPECTIVE?

7. PROPOSED LOCATION (CITY/STATE):

8. WHY IS PROPOSED LOCATION PREFERRED? (What alternatives were considered?

What factors were considered?):

9. PROPOSED VENUE (COMMERCIAL) (GOVERNMENT) (Be as specific as possible):

10. HOW HAS THE “LOCAL FIRST” POLICY ON GOVERNMENT TRAVEL AND

CONFERENCE-RELATED SPENDING BEEN CONSIDERED/IMPLEMENTED?

11. IF PROPOSED VENUE IS NOT A GOVERNMENT OWNED OR PROVIDED

LOCATION, WHAT STEPS WERE TAKEN TO SECURE SUCH A LOCATION? IF NONE ARE AVAILABLE, WHY?

13. WHAT HAS BEEN DONE TO IDENTIFY AND ASSESS POTENTIAL SECURITY OR FORCE PROTECTION CONCERNS?

WHAT ACTIONS WILL BE TAKEN TO ADDRESS THESE CONCERNS?

14. PROPOSED PARTICIPANTS (Indicate range of grades of participants and numbers expected/invited): MILITARY ATTENDEES:

• GENERAL OFFICERS: DOD CIVILIAN ATTENDEES:

. POLITICAL APPOINTEES:

• SES: DOD CONTRACTOR ATTENDEES: NON-DOD ATTENDEES: OTHER INVITEES:

15. HOW LARGE A SUPPORT STAFF (AIR FORCE AND CONTRACTOR) WILL BE

INVOLVED? HOW MUCH HAS BEEN SPENT OF PRELIMINARY PLANNING?

16. WHAT STEPS HAVE BEEN TAKEN TO MINIMIZE THE NUMBER OF

ATTENDEES, INVITEES AND SUPPORT STAFF?

17, HOW MANY ATTENDEES AND/OR SUPPORT STAFF WILL BE IN A

TEMPORARY DUTY STATUS AND HOW MANY WILL BE FROM THE LOCAL AREA?

18, IS SPOUSE TRAVEL FUNDED AT GOVERNMENT EXPENSE BEING REQUESTED?

ARE SEPARATE SPOUSE SESSIONS PLANNED? (Provide agenda) NUMBER OF SPOUSES TO ATTEND:

JUSTIFICATION FOR SPOUSE TRAVEL/PARTICIPATION:

PROVIDE DETAILS OF PROPOSED CO-SPONSORSHIP ARRANGEMENT
OR AGREEMENT (Delineate expected contributions/responsibilities of parties)

20. WILL FUNDING FOR A PORTION OF THE CONFERENCE BE PROVIDED BY

AN OUTSIDE SOURCE? (If yes, describe source and uses of these funds)

21. WHAT IS THE AGENDA (Attach a copy with as much specificity as possible, include *break-out sessions," social events, collateral activities):

WHAT ARE THE PROPOSED TRAVEL DATES FOR ATTENDEES? WILL THE AGENDA INCLUDE ANY CLASSIFIED INFORMATION? (If so, what steps will be taken to safeguard the information?)

22. HAS A CONFERENCE PLANNER OR COORDINATOR OR SIMILAR

COMMERCIAL SOURCE OF SUPORT BEEN ENGAGED? (Describe expected duties and projected costs)

Page 15

TRICÁRE, which is our medical system that pays providers, has built into all their contracts what amounts to a recovering auditing procedure where they look after the money has been paid for whether there have been overpayments.

We are developing, in connection with the legislation Congress passed a couple of years ago, a post-payment sampling procedure for all of our payment categories so that we will statistically go back and verify that we have reasonable levels.

I believe it is around $1 billion of improper payments. That is $1 billion too much, but it is a tiny portion of our budget. We do have a recovery procedure. Many of those improper payments are personnel, and we tend to get those back very quickly. We have the best set of auditors in the world for personnel, which is all the people that receive the money, and they tend to look very carefully at their paychecks and tell us if there is a problem. Many of them will tell us if it is too high. They will all tell us if it is too low, I think. We are usually able to quickly correct those problems.

I think we have a good program, but it is one that needs continued attention because we are aware that in this day and age we need to have as few as possible, preferably zero, improper payments.

So let me get you more specific numbers on the exact amount and the recovery.

[The information referred to follows:] Fiscal Year 2011: Total Department-wide improper payments: $1139.5 million Department-wide error rate:

0.18 percent Total underpayments*:

$456.4 million Total overpayments:

$683.1 million Total recoveries:

$368.6 million Recovery rate (1 year)

54 percent (fiscal year 2011 only) Recovery rate (cumulative)

93 percent (fiscal years 2004–2011) * Underpayments are not subject to recovery.

In response to your question on what the Department of Defense (DOD) is doing to prevent improper payments, we use a computer software tool (called Business Activity Monitoring) that utilizes algorithmic logic to identify potential duplicate and overpayments in time for a technician to review and stop disbursement if the transaction is identified as potentially improper. We also analyze the root causes of our payment errors to see if technicians need additional training, or if a system edit could help prevent future errors. DOD also conducts regular outreach meetings with vendors and contractors to explain the importance of accurate invoicing and to encourage single invoice submissions where possible, rather than multiple submissions. For example, if a vendor submits an invoice through regular mail and then also submits it electronically, it is possible this could result in a duplicate payment.

DOD also has an aggressive debt management program to recover improper payments. One area that is proving especially successful is where a debt in one part of DOD (let's say the Army) can be offset against a payment pending in another part of DOD (for example, the Navy). We call this our Centralized Offset Program. We have also partnered with Treasury by transferring outstanding debts at day 120 instead of day 180 which is the legal threshold. By doing this earlier transfer, there is a better chance for recovery because Treasury has access to collection tools not available to other Federal agencies that enhance the collection of debt.

Senator AYOTTE. I appreciate that. Mr. Khan, I do not know if you had anything to add to that.

Mr. KHAN. I am not going to dispute the numbers that Secretary Hale has just mentioned. It is just that going back to fiscal year 2010, we had concerns about DOD not including all classes of transactions which were captured in the methodology for calculating improper payments. We understand this year—the class of transaction I am referring to is commercial pay—that that is included in the methodology for calculating improper payments. We do have work underway to look at-essentially it is done on a sampling basis as to how robust the methodology this year is to come up with the improper payments numbers. Again, we are also going to look at recovery auditing as part of that body of work. So we will have more information forthcoming later on this year.

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Now, this stuff is not. It is the opposite. It is very difficult to understand. I have really worked at it to try to understand it.

But just to give context so people understand, we have a defense integrated military human resource system that we spent 12 years on and more than $1 billion in an effort to modernize the military payroll and personnel systems. Of course, we had to cancel it 2 years ago. Now, if you look at that, that makes that money spent on that conference in Las Vegas look like couch change.

If I look at all the 11 ERP programs, we now cumulatively are $6 billion over budget and 31 years behind schedule. Now, that is a problem. I know you are all working on it and I sense how focused you are and I do think improvements have been made. So I am not here to say that we are not doing better because I think we are. But I do think that if everyone out there understood the magnitude of the issues that we face in terms of financial accountability in DOD, maybe they would be more focused on this than on the clowns and the mind readers in Las Vegas.

Let me talk a little bit about the inability to account for funds in Afghanistan. I have been worried about the accuracy of distribution of our money to the payroll of the Afghanistan National Army (ANA). I know that the IG identified almost $50 million worth of errors in the ANA payroll advances. They concluded this was possible because DOD did not have written procedures or perform adequate reviews and they relied on summary and not detailed data when distributing the quarterly advances.

After all the problems we had in Iraq and after all the reports of the Special Inspector General for Iraq Reconstruction there, how is it possible that we still have this level of failure in terms of written procedures or review as it relates to the expenditures of funds in Afghanistan?

Mr. HALE. I am not familiar with this, I am embarrassed to say. I will get familiar with it. I am going to ask if any of my colleagues are aware.

Ms. MATIELLA. I am not familiar with the issue. However, I can propose that anytime there is a problem, it is because the systems, like you said, are not there to do the work that they need to do. As you well know, in the Department of the Army, our legacy systems just cannot do that kind of work. That is why we are rolling out a new system, a system that will have much more discipline, that is much more integrated than the ones we have now.

Senator MCCASKILL. Is the ANA payroll coming through the Army or is it coming through OSD?

Mr. HALE. I think it would be through the Army, and we do pay them. This is American money. I believe it is done through the Army.

Senator MCCASKILL. I understand. There is a lot of the subject covered here. If you will get back to me on this particular problem because I want to make sure that we are doing better on that.

Mr. HALE. We will. [The information referred to follows:] Since the Department of Defense (DOD) Inspector General (IG) investigation was completed in December 2011, the NATO Training Mission-Afghanistan Combined Security Transition Command-Afghanistan (NTM-A/CSTC-A) has redesigned the Afghanistan National Army (ANA) payroll distribution process, implemented internal control procedures, and developed detailed standard operating procedures. The payroll advances described in the DOD IG report have been replaced with the current Direct Contributions process whereby ANA budget managers are provided a financial commitment ceiling from NTM-A/CSTC-A, and Financial Management Oversight offices at NTM-A/CSTC-A provide oversight and control. Furthermore, NTM-A/CSTC-A has put into practice four initiatives that have improved internal controls and mitigated fraud within the ANA payroll process: integration of financial advisors who work on-site in close cooperation with the ANA Corps Finance Officers; implementation of a monthly pay verification process; implementation of a centralized pay system; and improved banking operations.

Page 17

Mr. HALE. First, we are trying to develop more skills. I wish we had more. We have some. We have some good people, and I will ask my colleagues to comment on this.

As far as using the internal audit agencies, it will violate the independence rules. GAO will not allow that.

Senator MCCASKILL. Not GAO. What if we got a special hit squad from DCAA and

Mr. HALE. First, DCAA is a pricing audit agency. They do not do financial statement audits. They are auditors.

Senator MCCASKILL. Yes, but a lot of them are Yellow Book. Mr. HALE. I have them pretty busy doing other things right now.

Senator McCASKILL. I can go find you a bunch–I can go out to State auditors offices

Mr. HALE. You could do that.

Senator MCCASKILL—and find you a team of government-trained auditors that you could get a lot less expensively than $500 an hour.

Mr. HALE. I think we would get into independence problems there too if they really worked for me or for any of the unders.

Senator MCCASKILL. Yes, but you are not trying to do this to get a clean opinion. You are doing it for training.

Mr. HALE. Let me ask the Services to comment on their remediation efforts and the extent they have people.

Dr. MORIN. Ma'am, if I may. Senator MCCASKILL. Yes.

Dr. MORIN. Ma'am, we have been trying to do this within the limits of audit independence and have had some reasonable success. The Air Force Audit Agency has provided a team of about 25 of their auditors that are focusing for us on just targeted areas of internal control investigation that directly support our audit readiness effort. They are not telling me, go in and do this to pass an audit, in quite those terms, and they are not themselves auditing in that sense, but they are doing very targeted investigations of key controls that are driven by our audit readiness plan. Then we will, of course, have another, a separate auditor, come in and do an eventual examination.

Senator MCCASKILL. Of course. Obviously, I am not suggesting that we would ever hire anyone to do audits internally. That would not work. But having the expertise inside that can help with guideposts. I get that you wanted to try again because you had made progress and you wanted to see how much progress you had made. I think that is all good. But the basics of internal controls I think a lot of government auditors could have helped with that would have not needed a whole

Ms. MATIELLA. I believe that certifications are very important. They show a skill set. For example, the certification of being a Certified Public Accountant (CPA) is an important skill set to have when you are trying to become auditable or create financial statements that are auditable. I am a CPA. My audit director is a CPA. It is a very valuable skill to go out and hire. It does make a difference in terms of knowing what is required by the Yellow Book.

We also use our AAA to a large extent to check us, to be independent but also to check us to make sure that we are doing the right thing.

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tion report, in May 2004 the Army awarded a services contract to the Aegis Corporation for security management services, protective services, and antiterrorism support and analyses in Iraq. The contract was for a 1-year base period—June 1, 2004 through May 31, 2005—and two 1-year options—June 1, 2005 through May 31, 2007. The two 1-year options were exercised, and the second option year was extended for 6 months to November 30, 2007. As of April 7, 2011, obligations totaled $447.5 million, and Aegis had received $445.5 million.

Similar jobs go well beyond security and frontline soldier missions. For example, according to a 2009 CBŠ report, Kellogg, Brown, and Root (KBR) was found to charge $100 per load of laundry. Yet, we have Quartermaster Corps soldiers trained to operate shower and laundry equipment. Further, the Laundry Advance System, which is a mobile laundry trailer, is capable of supporting large military units.

With that in mind, below is a sampling of jobs being performed by contractors doing the same job as a military servicemember in Afghanistan. Please provide a comparison in salaries of the following positions:

Contracted Position Military Position
FLUOR Security Manager (Afghanistan)U.S. Marine MOS 0311 SABRE International Security Manager-U.S. Army 11B30 Dyncorp Detainee Expert-U.S. Army 31E20 Armor Group Security (Afghanistan)Army 11B10/Marine 0311

Aegis Security Escort Team Leader-Army 11B20/Marine 0311

Triple Canopy Security Guard (Afghanistan)—U.S. Army 11B/

Marine 0311

KBR Laundry Facility Attendant—U.S. Army MOS 57E10 KBR Laundry Facility Supervisor-U.S. Army MOS 57E30 KBR Food Service Specialist—U.S. Army MOS 92G10

KBR Food Service Specialist Supervisor-U.S. Army MOS 92G Mr. HALE. The 2012 Defense Strategic Guidance 1 indicates DOD is maintaining a ready and capable force even as it reduces the size of the military. We are focused on sustaining the military's warfighting capabilities. This strategy entails leveraging non-military personnel for the support activities associated with combat, including the types of support services listed in your question as well as reconstruction activity, which is non-military in nature. The use of contractors in these support activities has been a feature in every war or contingency operation in our history. As the 2010 Quadrennial Defense Review (QDR)2 acknowledged, contractors are part of the total force, providing an adaptable mix of unique skill sets, local knowledge, and flexibility that a strictly military force cannot cultivate or resource for all scenarios. This is true even for contractor-provided security:3 More broadly, contractors provide a range of supplies, services, and critical logistics support in many capability areas, while reducing military footprint and increasing the availability and readiness of resources.

We are in the process of assembling the requested data, but caution that a direct comparison between the contracted cost for an individual and the salary of a military position poses challenges. For example, a soldier's annual salary does not reflect the life-cycle costs to recruit, train, retain, and retire the individual; and a contractor's annual salary does not capture the fact that this work-for-hire resource comes pre-recruited and pre-trained and can be flexibly engaged and released. In 2009, the Chairman of the Joint Chiefs of Staff commissioned a task force to assess DOD's reliance on contracted support in contingency operations and provide recommendations to improve our ability to plan for and execute operational contract support. As a result, the Chairman, with great support from the Secretary of Defense, has directed a number of efforts to institutionalize this capability. These ongoing efforts include, but are not limited to, improvement to strategic planning guidance, doctrine, education, and resources. GAO is currently evaluating DOD's efforts in this area under job number 351692.

DOD agrees that it must continuously look closely at the business practices of contracting, particularly in support of frontline soldiers. We have been working with Senator McCaskill, who chairs this subcommittee, and others on improving wartime

Page 19

Mr. HALE. Procuring defense articles at economic rates often yields savings, in comparison to procurement actions where vendors are unable to take advantage of economies of scale production. Likewise, terminating or cancelling procurement in advance of what was contracted, typically results in additional costs to the government, to prematurely closeout production. DOD customarily seeks to maximize its. spending by buying at economic rates. However, when the funding is constrained and the resources are allocated over a wide portfolio of defense missions, maintaining efficient rates and keeping production lines open become challenging,

Once DOD has been notified by OMB as to the annual budget level, DOD will carefully examine investment strategies and alternatives to address the full spectrum of national security requirements by crafting a balanced budget plan to minimize inefficiencies as a result of lower funding levels.

16. Senator AYOTTE. Secretary Hale, in January 2011, DOD announced that it had found $154 billion in efficiencies over the next 5 years and that it would be able to invest $70 billion of that saved money into more deserving accounts. Those efficiencies included scores of initiatives, including program cancellations and restructuring, consolidations in various facilities and functional areas, reductions to DOD's workforce, and cuts to the number of flag and general officers and senior executive personnel. Where in its overall plan of action and milestones is DOD in implementing these efficiency initiatives?

Mr. #ALE. DOD has established governance processes and reporting mechanisms to manage implementation of the 300+ efficiency initiatives. The Services and the Office of the Secretary of Defense (OSD) are on target to successfully implement their President's budget for 2012 efficiencies. On April 23, 2012, the Services briefed the Senate Appropriations Committee and Senate Armed Services Committee staffs on their fiscal year 2012 Secretary of Defense efficiency initiatives, explaining the key focus areas in which they intended to gain efficiencies, the implementation process, and assessment of risk.

Due to enactment of the BCA of 2011, many of the reinvestments included in the fiscal year 2012 President's budget request have been offset by major force structure changes and other reductions in the fiscal year 2013 budget.

17. Senator AYOTTE. Secretary Hale, to what extent is DOD actually realizing the intended savings?

Mr. HALE. Senior leadership within DOD routinely monitor execution of these efficiencies to ensure that intended savings are realized. As of the March 19, 2012, briefing to the Deputy Secretary of Defense, the Services and OSD are on target to successfully implement their President's budget for 2012 efficiencies. In addition, the Services briefed the Senate Appropriations Committee and the Senate Armed Services Committee staffs on April 23, 2012, assuring the staffs that they are on track to meet their fiscal year 2012 efficiency targets.

18. Senator AYOTTE. Secretary Hale, without the ability to audit DOD's Statement of Budgetary Resources (SBR), how do we actually know we are saving this money?

Mr. HALE. Although the overall DOD SBR is not yet auditable, each component annually certifies its own financial reports. These individual, component-level accounting systems provide the execution information utilized in each component's efficiency governance and reporting process. In March 2012, all the Services and OSD reported on track execution of their efficiencies.

19. Senator AYOTTE. Mr. Khan, do you have any concerns that the quality of DOD's financial management data, business processes, and business systems may not be conducive to fully achieving these intended savings?

Mr. KHAN. As we have reported, DOD does not yet have accurate and reliable financial data needed to effectively carry out its management functions, including identifying and managing the costs of its operations, and reliably estimating resource needs. We have also reported that weaknesses in DOD's business processes and systems contribute to the lack of reliable financial data. In estimating reported cost savings, we would expect that DOD would have to rely to some extent on historical financial management data as well as program performance information to identify areas where potential efficiencies and related cost savings could be achieved. To track its progress in achieving these savings, we would expect that DOD would need to rely on information in its accounting systems as well. Therefore, until DOD corrects the weaknesses in its accounting and other business processes and systems so that it is able to produce reliable financial data for its cost savings efforts, any reported cost savings will not be reliable.

Page 20

In the 3 years since initial operations, GFEBS grew from 1 million transactions in fiscal year 2009 to an estimated 60 million transactions in fiscal year 2012 and from $1.2 billion in obligations to over $100 billion executed in fiscal year 2012.

33. Senator AYOTTE. Secretary Westphal and Secretary Matiella, how is GFEBS helping the Army achieve its financial management goals?

Nr. WESTPHAL and Ms. MATIELLA. GFEBŠ is critical to the Army's financial management goals, which include producing unqualified financial statements and providing cost accounting capability for more effective use of resources. GFEBS is providing the Army with:

• A financial accounting system that complies with statutory and regularity requirements for funds control, accounting, and auditing, to include real property and other asset data for depreciation; and provides visibility of the transactional and budget execution data in real or near real time. GFEBS provides the foundation for the Army to receive an unqualified audit opinion on its annual general fund financial statements. • A cost accounting system that provides full cost by allocating overhead and other indirect costs to outcomes, outputs, and services; and connects operational performance data to the cost data. GFEBS enables the Army to conduct more cost-benefit and other types of cost analyses as well as transition to a cost culture. • A management and decision support system that records financial and various other transactions in a single system, provides visibility of the transactional data in real time or near real time and provides trend, comparative, and other analytic data. GFEBS will enable more thorough, factbased analyses for both current-year operational performance and future

programs and budgeting decisionmaking. Consistent with OSD and Army goals to strengthen financial management, GFEBS enables the Army to:

• Reduce costs, by subsuming the capabilities of over 100 systems. • Standardize processes across all Army organizations. • Achieve compliance with numerous requirements, including FFMIA, SFIS, and the Bureau of Economic Analysis. • Implement a transaction-driven general ledger as well as tighter system controls in accordance with Federal Information Systems Control Audit

Manual (FISCAM) requirements. With GFEBS, the Army is poised to support both a SBR audit assertion in fiscal year 2014, as directed by the Secretary of Defense; and fully auditable financial statements, as required by Congress by 2017.

34. Senator AYOTTE. Secretary Westphal and Secretary Matiella, what is the experience from the field in using the system?

Mr. WESTPHAL and Ms. MATIELLA. The magnitude of change associated with GFEBS is unprecedented in the Army business community. Not only is GFEBS a major technology change, replacing 40-year-old financial systems, but with the GFEBS deployment the Army is dramatically changing business processes, user roles and functions, implementing a new financial language (based on SFIS), and enforcing system and processes controls that were not mandated in our previous systems.

The Army has embraced GFEBS and understands the value GFEBS provides in achieving Army and DOD objectives. Before every GFEBS go-live, each organization asserts its readiness for deployment and at each of the 10 go-lives we have received universal concurrence from all organizations in the Army and DFAS.

While there is a significant learning curve that must still be overcome by those organizations that have recently gone live, those who have been using the system are pleased with its capabilities. They experience better data visibility, faster yearend close processes, more streamlined reimbursable processes, and much greater cost management capabilities. Not a single GFEBS user or organization that has been using the system for more than a few months has ever asked to go back to their legacy systems.

35. Senator AYOTTE. Secretary Westphal and Secretary Matiella, I understand that you received a qualified audit opinion on a portion of the program. Can you explain what that means and its impact?

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QUESTIONS SUBMITTED BY SENATOR JOHN CORNYN

42. Senator CORNYN. Secretary Hale and Ms. McGrath, according to House Armed Services Committee hearings, DOD has over 48,000 civilian financial managers. That's 48,000 accountants, auditors, financial managers, budget analysts, clerks, administrators, payroll officials, and others. On top of that, it is my understanding that there are another 10,000 DOD military personnel who perform these roles. To put this into perspective, this would be enough people to operate both the ship and air crews for 10 aircraft carriers or the equivalent of 10 fully-equipped Army Brigade Combat Teams. It's more than 10 times the number of combat aviators in the Air Force. How is it that you cannot make more progress when you have 10 brigades worth of people coming to work every day to help fix it?

Mr. HALE. DOD relies on these dedicated financial management professionals to provide and manage the resources DOD uses to execute the national security mission. The number of financial managers does seem extraordinarily large on first glance.

To better understand the figures in light of DOD's enormous size (over 3 million employees), we have performed analysis comparing our financial management workforce to other Federal agencies as well as large private sector companies. The size of our workforce and the resources devoted to financial management as a percentage of resources are in line with these organizations, using them as comparable benchmarks.

I agree that we can make more progress on financial management, and recent efforts including the involvement of Secretary Panetta have already sped up that progress. In addition, as we implement more automated and integrated processes, our financial management processes will become less labor-intensive, offering opportunities for reducing these numbers. Even more importantly, those personnel remaining will have more time to devote to analysis and process improvement.

Ms. MCGRATH. DOD relies on these dedicated financial management professionals to provide and manage the resources DOD uses to execute the national security mission.

To better understand the figures in light of DOD's enormous size (over 3 million employees), our Comptroller staff has conducted an analysis comparing our financial management workforce to other Federal agencies as well as large private sector companies. The number of financial managers does seem extraordinarily large on first glance, but when described as a percentage of DOD's population, the numbers align to other Federal agencies. The size of our workforce and the resources devoted to financial management as a percentage of resources are in line with those benchmarks.

We agree that DOD can make more progress on financial management, and recent efforts including the involvement of Secretary Panetta have already accelerated our progress. In addition, as we implement more automated and integrated processes, our financial managers will have more time to devote to analysis and process improvement.

43. Senator CORNYN. Secretary Hale, you have regularly testified that congressional involvement has helped spur action with regard to improving financial management. Would you agree that Congress should pass legislation codifying Secretary Panetta's announcement that DOD would have an auditable financial statement on its SBR by 2014?

Mr. HALE. DOD is committed to achieving Secretary Panetta's goal of an auditable SBR by 2014, regardless of whether the date is codified in legislation. If Congress did pass legislation to codify the Secretary's accelerated date, we recommend the legislation specify that “the general fund SBRs of material components are validated as ready for audit by not later than September 30, 2014” for consistency with the Secretary's direction.

44. Senator CORNYN. Secretary Hale and Ms. McGrath, could you please provide a date when DOD will be removed from GAO's high risk list for fraud, waste, and abuse for financial management and business transformation?

Mr. HALE and Ms. MCGRATH. GAO has established five criteria for removal from the high-risk list that can form a roadmap for efforts to improve and ultimately address high-risk issues: (1) Demonstrated top leadership commitment; (2) Capacity, including people and other resources to resolve the risk, and establishing reporting and accountability mechanisms; (3) Corrective action plan that implements solutions to address root causes; (4) Monitoring, including establishing performance measures; and (5) Demonstrated progress in implementing corrective actions and making appropriate adjustments to action plans based on data. GAO makes the determination to remove an area from the high-risk list once they conclude that sufficient progress has been made in addressing the issues associated with the high-risk area.

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