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71–444 2012

[H.A.S.C. No. 112–73] 

IS THE FINANCIAL MANAGEMENT 

WORKFORCE POSITIONED TO ACHIEVE 

DOD’S FINANCIAL IMPROVEMENT GOALS? 

HEARING 

BEFORE THE

PANEL ON DEFENSE FINANCIAL MANAGEMENT 

AND AUDITABILITY REFORM 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

OCTOBER 6, 2011 
(II) 

PANEL ON DEFENSE FINANCIAL MANAGEMENT 

AND AUDITABILITY REFORM 

K. MICHAEL CONAWAY, Texas, Chairman 

SCOTT RIGELL, Virginia 

STEVEN PALAZZO, Mississippi 

TODD YOUNG, Indiana 

ROBERT ANDREWS, New Jersey 

JOE COURTNEY, Connecticut 

TIM RYAN, Ohio 

PAUL FODERARO, Professional Staff Member 

WILLIAM JOHNSON, Professional Staff Member 

LAUREN HAUHN, Research Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2011 

Page 

HEARING: 

Thursday, October 6, 2011, Is the Financial Management Workforce Positioned To Achieve DOD’s Financial Improvement Goals? ................................ 1 

APPENDIX: 

Thursday, October 6, 2011 ...................................................................................... 23 

THURSDAY, OCTOBER 6, 2011 

IS THE FINANCIAL MANAGEMENT WORKFORCE POSITIONED TO 

ACHIEVE DOD’S FINANCIAL IMPROVEMENT GOALS? 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Andrews, Hon. Robert, a Representative from New Jersey, Ranking Member, 

Panel on Defense Financial Management and Auditability Reform ................ 2 

Conaway, Hon. K. Michael, a Representative from Texas, Chairman, Panel 

on Defense Financial Management and Auditability Reform .......................... 1 

WITNESSES 

Commons, Hon. Gladys J., Assistant Secretary of the Navy (Financial Management and Comptroller), Department of the Navy ....................................... 6 

Gregory, Sandra A., Special Assistant to the Under Secretary of Defense 

(Comptroller), Office of Financial Workforce Management, U.S. Department 

of Defense ............................................................................................................. 3 

Matiella, Hon. Mary Sally, Assistant Secretary of the Army (Financial Management and Comptroller), Department of the Army ....................................... 5 

Morin, Hon. Jamie M., Assistant Secretary of the Air Force (Financial Management and Comptroller), Department of the Air Force ................................. 8 

APPENDIX 

PREPARED STATEMENTS: 

Commons, Hon. Gladys J. ................................................................................ 46 

Conaway, Hon. K. Michael .............................................................................. 27 

Gregory, Sandra A. ........................................................................................... 31 

Matiella, Hon. Mary Sally ............................................................................... 40 

Morin, Hon. Jamie M. ...................................................................................... 51 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Andrews ..................................................................................................... 62 

Mr. Palazzo ....................................................................................................... 61 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

[There were no Questions submitted post hearing.] 

(1) 

IS THE FINANCIAL MANAGEMENT WORKFORCE POSITIONED TO ACHIEVE DOD’S FINANCIAL IMPROVEMENT GOALS? 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND

AUDITABILITY REFORM, 

Washington, DC, Thursday, October 6, 2011. 

The panel met, pursuant to call, at 8:00 a.m. in room 2212, Rayburn House Office Building, Hon. K. Michael Conaway (chairman 

of the panel) presiding. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE FROM TEXAS, CHAIRMAN, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND AUDITABILITY REFORM 

Mr. CONAWAY. Welcome, everyone, to our hearing this morning 

on DOD’s [Department of Defense] workforce efforts and management. I would like to welcome everybody to today’s hearing, entitled ‘‘Is the Financial Management Workforce Positioned To 

Achieve DOD’s Financial Improvement Goals?’’ 

The panel’s past hearings have included examining the implementation of financial improvement and audit readiness strategy 

and methodology, the organizations that play a key role in DOD’s 

ability to improve financial management such as the Defense Finance and Accounting Service, and DOD’s payment and funds control process. 

One thing that has been readily apparent from these hearings is 

the importance of a well-qualified, well-trained financial management workforce. For example, at our last hearing the Department 

of Defense Office of IG [Inspector General] noted that inadequate 

training was one of the factors that contributed to potential 

Antideficiency Act violations. 

The financial management workforce ranges from accountants to 

auditors to financial analysts, and is made up of both civilian employees and military personnel. All of these groups are critical to 

DOD’s financial improvement efforts. The financial management 

workforce needs to effectively perform financial and budgetary accounting, and follow proper internal control procedures as they execute their work. If there are gaps between the competencies required to perform these functions and current capabilities, they 

should be, and must be, identified and corrective actions taken. 

In addition, due to the constrained fiscal environment, it is imperative that the Department of Defense effectively manage its 
2 

workforce, including ensuring the right skills mix in order to 

achieve improved financial management. 

I think a workforce with the adequate and appropriate skills is 

especially important as DOD moves to enterprise resource planning 

systems. It is essential that the users of these systems understand 

the capabilities of the systems and receive the proper training on 

how to use them in performing their day-to-day operations. 

One thing is clear. You can develop plans to improve financial 

management, implement new financial systems, and refine business processes. But without a well-staffed, well-trained and skilled 

workforce you will not achieve success. 

I want to thank our witnesses in advance for their testimony and 

agreeing to be with us again, three of them. We have today Ms. 

Sandra Gregory, special assistant to the Under Secretary of Defense, Comptroller, Office of Financial Management; the Honorable 

Mary Sally Matiella, Assistant Secretary of the Army, Financial 

Management Comptroller; the Honorable Gladys J. Commons, also 

Assistant Secretary to the Navy, Financial Management Comptroller; and the Honorable Jamie M. Morin, Assistant Secretary of 

the Air Force, Financial Management Comptroller. 

Welcome all four of you this morning. And now Rob, if you have 

got some remarks before we turn to the witnesses? 

[The prepared statement of Mr. Conaway can be found in the Appendix on page 27.] 

STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE 

FROM NEW JERSEY, RANKING MEMBER, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND AUDITABILITY REFORM 

Mr. ANDREWS. Good morning, Mr. Chairman. Good morning ladies, and gentleman. It is nice to see all of you here this morning, 

many returnees. That is very brave of you. 

[Laughter.] 

Chairman McKeon, I think, is performing a significant national 

service at the full committee level by conducting a very rigorous 

discussion of the consequences of the fiscal choices in front of the 

Department of Defense. 

It appears that, under any circumstances, we would be looking 

at reductions in the neighborhood of $360 billion over 10 years at 

a minimum, and perhaps reductions of far in excess of that, as 

many as $950 billion or a trillion dollars over 10 years. 

There are strongly held opinions about whether that is right or 

wrong. There are strongly held opinions about whether to do that 

or not. And I think the chairman deserves credit, a lot of credit, 

for focusing the committee, and the country hopefully, on that discussion. 

Our panel’s work, which our chairman has done so well, is integral to having an intelligent discussion about those policy choices. 

You can’t decide where to allocate your resources if you don’t know 

where they are going already and where there might be ways to 

reallocate existing resources to achieve the mission of the organization. 

So that the production of financial statements is central to this 

entire discussion taking place on a rational basis, and our panel 
3 

chairman is pretty much solely responsible for putting us in a position where we are going to have those. His work, and the statute 

that we wrote last year, is the reason why these statements are 

going to happen by 2017. 

Having said that, he and I are both—and other members of the 

panel are very impatient. We understand 2017 is the outside date. 

We would like progress well before that. And this morning we are 

going to talk about the thread that, if it is pulled out of that tapestry, makes the whole thing fall apart. 

As the chairman said, we can have all the enterprise management systems—I always get that term wrong, excuse me—yes, we 

can have all the systems that we want, all the software we want, 

all the plans that we want. If we don’t have the right people, if we 

can’t recruit and retain the right people, this is not going to work. 

So I am very interested this morning in hearing what the panelists 

think, not only about recruitment of the best and the brightest but, 

in some cases more importantly, retention. 

A recurring problem throughout the Department of Defense, both 

in the uniform and non-uniform sector, has been that we do a very 

good job attracting bright people to come to the uniform service and 

the civilian service, and then we don’t keep them as well as we 

should. 

We invest a lot in their education, their training, their development, and we don’t keep them as well as we should. So I am interested in hearing, you know, how we can get the best graduates of 

the Wharton School, to name one, to come to the Department and 

stay there so that they can do this kind of work as part of their 

national mission. 

So I am glad to be here this morning. I look forward to hearing 

from you ladies and gentleman. I thank the chairman for having 

the hearing. 

Mr. CONAWAY. Thank the gentleman for his kind words. 

Ms. Gregory, for your opening statement. 

STATEMENT OF SANDRA A. GREGORY, SPECIAL ASSISTANT TO 

THE UNDER SECRETARY OF DEFENSE (COMPTROLLER), OFFICE OF FINANCIAL WORKFORCE MANAGEMENT, U.S. DEPARTMENT OF DEFENSE 

Ms. GREGORY. Chairman Conaway, Ranking Member Andrews, 

members of the panel, thank you for the opportunity to testify 

today concerning the Department of Defense financial management 

workforce. I submitted a statement for the record, which I will 

summarize briefly. 

With more than 33 years of DOD financial management experience, I continue to serve with a dedicated, skilled financial workforce that is seriously mindful of its stewardship role. As the functional committee manager for the DOD financial management community, I am responsible for compliance with overarching DOD civilian human capital strategy plan that is lead by the Under Secretary of Defense for personnel and readiness. 

Our goal is to make a good workforce better, and to get the right 

people trained at the right job, for today and for the future. In concert with the Department’s human capital plans, we recently took 

steps to establish a course-based certification program designed to 
4 

provide a framework and as a way to promote certain types of education, including a focus on auditability for defense financial managers. 

This program will focus on critical areas to include achieving department-wide auditability, sharpening analytics, and increasing 

overall accountability. The proposed DOD Financial Management 

Certification Program, will be similar to the program for the Defense Acquisition Workforce. 

The House and Senate Armed Services Committees have provided legal authority for the new program in their fiscal year 2012 

authorization bills. And as Congress works through the legislative 

process, we are laying the groundwork now so we will be ready to 

implement the program once the Authorization Act is finalized. 

Our effort is currently focused on five areas. First, to map existing Department of Defense courses to competencies. The DOD Financial Management Certification Program is based on financial 

management enterprise-wide competencies. The DOD portfolio of financial management training and professional development 

courses will be aligned to these competencies. 

This alignment will aid in building a standard body of DOD financial management knowledge and in elevating shared competencies, with a renewed emphasis in analytics, decision support 

and audit readiness. 

Second, we are focusing on test-based certification. The Department has identified 20 professional test-based certifications for 

areas such as accounting, auditing, cost and financial management. 

Third, we are concerned with the range of experience in our financial management professionals. The certification program will 

require not only specific DOD financial management experience at 

different levels, but it will also require experience in different types 

of assignments. 

Fourth, considering that our personnel are scattered throughout 

DOD and its many locations, we are sensitive to the need for communications and marketing. An aggressive and comprehensive 

communications and marketing campaign in terms of briefings, 

Web-based articles, and educational material is crucial to inform 

and educate the workforce prior and during implementation. 

And fifth, we are aware of the need for a certification program 

support, and oversight will be required at various levels throughout 

DOD to administer the program. DOD’s efforts are focused on deliberate, professional workforce development, ensuring that the financial management community has a broad, enterprise-wide perspective and a standard body of knowledge throughout the Department. 

We are focused on making a good DOD financial workforce even 

better as we march toward that 2017 goal of obtaining a clean 

audit opinion. In summary, the Department recognizes the importance of maintaining a capable workforce to improve financial management in DOD, and especially with respect to better analysis, 

audit readiness, and increased accountability for all who are entrusted with the taxpayers’ money. 

We appreciate the support of both the House and Senate Armed 

Services Committees, and they have provided needed legal authority in their authorization bills for the Financial Management Cer-
5 

tification Program. And we will work with the House and the Senate on final language for the fiscal year 2012 NDAA [National Defense Authorization Act]. 

So I appreciate the time you and your distinguished panel have 

devoted to financial management workforce issues. I look forward 

to your questions. 

And, Mr. Chairman, this concludes my statement. 

[The prepared statement of Ms. Gregory can be found in the Appendix on page 31.] 

Mr. CONAWAY. Thank you, Ms. Gregory. 

Ms. Matiella. 

STATEMENT OF HON. MARY SALLY MATIELLA, ASSISTANT 

SECRETARY OF THE ARMY (FINANCIAL MANAGEMENT AND 

COMPTROLLER), DEPARTMENT OF THE ARMY 

Secretary MATIELLA. Chairman Conaway, Representative Andrews, and members of the panel, thank you for the opportunity to 

testify today regarding the Army’s financial management workforce. Secretary McHugh, Chief of Staff Odierno and Under Secretary Westphal, our Chief Management Officer, and all of our senior leaders appreciate the criticality of establishing and retaining 

a qualified workforce—a workforce which will enable the Army to 

be audit-ready by September 30, 2017. 

The Army employs hardworking soldiers and civilian personnel 

across all functional areas who are committed to improving our 

business processes and supporting our warfighters. However, the 

systems and processes that we are improving require the implementation and execution of different processes and different practices. 

By requiring our workforce to adjust to different systems, practices, and controls, my peers and I must fulfill our obligation to 

train them and to provide sufficient resources to train them successfully. The Army has a well-deserved reputation for training our 

soldiers as the best warfighters in the world. We are working toward supporting our warfighters with the best financial management workforce in the world. 

In fact, the Chief of Staff of the Army and the CMO [Chief Management Officer] of the Army recently initiated an Army-wide 

workforce capability assessment to obtain a better understanding 

of the Army’s functional capabilities to identify potential workforce 

redundancies and gaps, and to establish an actionable plan to improve the workforce. We are connecting the outcomes of that workforce review to the deployment of our new business systems, thus 

creating a more efficient and effective tail that supports the tooth 

of the Army. 

In addition to these critical workforce assessments, we are undergoing annual audit examinations by an independent public accounting firm each year from fiscal year 2011 to 2014. These audit 

examinations will serve to condition the Army on how to support 

financial statement audits and to ensure that our audit readiness 

strategy is sound and remains on schedule. 

By repeating this cycle of assessing, testing, identifying deficiencies, and implementing corrective action, we are providing our 

workforce with hands-on, real-life audit readiness experience and 
6 

training. We believe that this experience with audit examinations 

will supplement our instructor-led training courses on systems, internal controls, and corrective action implementation. 

While my office is guiding the Army’s audit readiness efforts, it 

is important to note that establishing and maintaining an 

auditable business environment depends heavily on business process owners outside of financial management or the comptroller 

field. Fortunately Secretary McHugh appreciates the fact, and is 

holding senior executives across all businesses accountable for supporting the Army’s audit readiness goals. 

I am working with my counterparts in logistics, manpower, and 

others to ensure that they understand our requirements and provide us appropriate support to meet this shared mission. It is extremely important that our business partners interface auditable 

data into our accounting system. That is, that their systems, processes, data, and controls also pass audit scrutiny. 

I am confident that we will be audit-ready by September 30, 

2017, because we have a sound and resource financial improvement 

plan that relies heavily on providing the appropriate training and 

resources for the Army soldiers and civilians, and also holds them 

accountable for enabling an auditable environment. 

Secretary McHugh, Chief of Staff Odierno, and Secretary 

Westphal are all committed, as I am, to improving our financial 

processes, conducting workforce analysis, and restructuring and 

training our financial workforce to meet audit standards. Developing the most capable workforce is the right thing to do for the 

Army, our Federal Government, and the men and women defending 

our Nation. 

I look forward to continued collaboration with the members of 

the panel, our counterparts in the Senate, GAO [Government Accountability Office], and Secretary Hale to ensure the Army’s workforce obtains and retains the appropriate skills, certifications, and 

experience to meet our stewardship responsibilities. 

I look forward to your questions. 

[The prepared statement of Secretary Matiella can be found in 

the Appendix on page 40.] 

Mr. CONAWAY. Thank you, ma’am. Ms. Commons. 

STATEMENT OF HON. GLADYS J. COMMONS, ASSISTANT SECRETARY OF THE NAVY (FINANCIAL MANAGEMENT AND 

COMPTROLLER), DEPARTMENT OF THE NAVY 

Secretary COMMONS. Good morning, Chairman Conaway, Congressman Andrews, members of the panel. Thank you for the opportunity to discuss the Department’s financial management workforce. 

The financial management workforce is a professional and welltrained team of 9,000-plus civilian and military personnel. Today, 

I specifically focus on personnel classified in the general schedule 

500 series—our financial managers, accountants, auditors, financial technicians, and our military financial managers. 

Our first responsibility is to the warfighter. We need to effectively obtain the financial resources to meet the warfighters’ needs 

by developing supportable budgets, budget strategies, and justification. We want to ensure that we get the most capability for every 
7 

dollar we spend and can accurately account for those expenditures. 

Achieving auditable financial statements will assure you, the 

warfighter, and the taxpayers that we take this responsibility seriously. 

For many years, we have had a very strong budget formulation 

and execution team. With the establishment of the Defense Finance 

and Accounting Service in the 1990s, most of our accounting expertise was transferred to that organization. While we divested the 

day-to-day accounting operation, we retained fiduciary responsibility. 

As we tried to improve financial management and move toward 

auditability, we recognize that we could no longer afford stovepipe 

positions or narrow skill sets. To be effective and efficient, our 

workforce needed a broad level of understanding of the full range 

of the Department’s financial management and fiduciary responsibilities. 

In 2006, we took steps to broaden the scope and responsibilities 

of our professional and technician workforce. As a follow-on, we 

provided career road maps to guide the education, training, and experience required by our workforce at all levels—entry, journeyman 

and expert. Today, we provide a range of opportunities from online 

training courses, classroom training to an Executive Master’s of 

Business Administration taught by the Naval Postgraduate School. 

We also have a fellowship program allowing full-time attendance at 

a graduate school or a career-broadening job assignment. 

However, we know that we have some skills and knowledge gaps, 

particularly in the area of audit readiness. To specifically address 

those gaps, we asked the Naval Postgraduate School to develop an 

audit readiness course. Starting this year, they will conduct a 3- 

day course to be taught 10 to 12 times during the year at our major 

geographic hubs. This will dovetail with the financial improvement 

and audit readiness short course taught by the office of the secretary of defense comptroller. 

Of equal importance is having the right number and mix of people to perform our financial management functions. Two years ago, 

we took steps to beef up my own financial operation staff to provide 

better oversight and guidance to our major commands, and to ensure we were taking proper steps and priorities to achieve financial 

audit readiness. 

Currently, I believe the financial management workforce is structured; civilians, military personnel, and contractor is properly sized 

to achieve our goals. While I have addressed the professionalism 

and training of our financial management workforce, I recognize 

that there are many others who influence the ability to achieve 

auditable financial statements. 

As I noted in my last testimony before you, we are reaching out 

to our general and flag officers, our senior executives, and business 

process owners so that they understand the roles and responsibilities that they play. We believe this will cascade down throughout 

the workforce and support the Department’s efforts to achieve 

audit readiness. 

Thank you for your interest in our workforce, and I look forward 

to answering any questions you might have. 
8 

[The prepared statement of Secretary Commons can be found in 

the Appendix on page 46.] 

Mr. CONAWAY. Thank you, Ms. Commons. 

Dr. Morin. 

STATEMENT OF HON. JAMIE M. MORIN, ASSISTANT SECRETARY OF THE AIR FORCE (FINANCIAL MANAGEMENT AND 

COMPTROLLER), DEPARTMENT OF THE AIR FORCE 

Secretary MORIN. Mr. Chairman, members of the committee, 

thank you again for an opportunity to testify here and to talk about 

the Air Force financial management workforce—our enlisted, our 

officers, our civilians. As the Air Force comptroller, I view it as my 

responsibility to make sure that the Air Force has the right workforce with the right skills and the right training in order to help 

our secretary and our chief of staff produce an Air Force that can 

fly, fight, and win for the Nation. That is our ultimate goal. 

At a time when our resources are very tight, it is all the more 

important that we get the most out of our people. For the Air 

Force, that means over 8,000 civilians in financial management, 

over 900 officers, and almost 3,800 enlisted members. Those are 

our Air Force financial managers, and it is really only through 

their full contributions that we can get the maximum combat capability out of each dollar that Congress appropriates and entrusts to 

us. Strengthening that workforce is a vital part of our effort. 

I will say while this panel is obviously created to focus on helping the Department of Defense get to audit readiness, as my colleagues have mentioned, not every financial manager in the Air 

Force is an accountant, not every financial manager in the Air 

Force is a budget officer, and a clean audit is a means to the end 

of better management of taxpayer resources. So I think it is important to understand the depth and the breadth of the Air Force financial management workforce. 

We cover a wide range of activities. Cost analysts, as I mentioned 

in previous testimony to this committee, are a key part of the Air 

Force financial management workforce, as are people doing program control and acquisition programs, as are the budget team, 

and down to the folks working at a technical level, processing military pay transactions. It is a broad workforce that includes auditors, transaction processors, planners, accountants, a whole range 

of activities. 

The Air Force needs that diversified financial management workforce in order to handle that full range of responsibilities that really extend throughout the life of appropriated funds, from initial development of a budget—a program objective memorandum when 

our cost analysts have to help us understand what we need in 

order to carry out our mission in terms of dollars—through to financial systems management and, ultimately, financial reporting. 

I also, of course, want to mention that many of these responsibilities have to occur in a deployed environment. Right now, we have 

over 260 Air Force financial managers deployed into harms way; 

again, doing a wide range of activities, from taking care of pay and 

benefits issues for other deployed folks all the way through budget 

building and cost analysis. 
9 

The workforce that we bring to bear on these challenges is quite 

well-educated and skilled. Over 60 percent of the Air Force financial management workforce holds a degree of some sort, and 2,700 

of those folks have master’s degrees or above. Now, that includes 

more than 100 of our enlisted troops who have a master’s. It is a 

well-educated workforce, and it is a workforce that is committed to 

professional development. 

We see a heavy focus on certifications, although there is always 

room for improvement there. Looking just at my primary headquarters-type audit readiness workforce and those directly associated with them out in the field, that is a workforce of about 80 people. And we have got 12 CPAs [certified public accountants] in that 

group. We have got 15 certified defense financial managers in that 

group, eight certified government financial managers in that group. 

It is a group that is well credentialed in terms of education, 

training, and certification. But it is critical that we continue to 

focus on getting that workforce the appropriate skills, education, 

and training as we work towards audit readiness. And some of the 

skills that they need to bring to bear will change as we move to 

new systems, again as my colleagues have alluded. 

Our financial managers are learning how to use, and some of the 

basic theory behind, the new enterprise resource planning systems. 

It demands a different set of skills and a different sort of attention 

to particular details than the prior systems did. There is no question about that. Moving from what is really a bookkeeping system 

to a true financial system that can produce auditable financial 

statements requires changes at every level. 

And it will require us to more broadly focus our training resources. We cannot identify just a tenth or a quarter of our workforce and lavish training on them. We have got to reach, really, 100 

percent because weak links in the chain can break the audit readiness effort. 

We have had a particular focus on the pilot users of our Defense 

Enterprise Accounting Management System, DEAMS, at Scott Air 

Force Base, where we have had close relationships with the program office and our functional management office to ensure that 

the line-level users on that system get the training they need, get 

the focused attention that they need, as they really relearn their 

jobs. And it is not without challenges, but it has been a productive 

handholding relationship, with the users teaching the developers 

and the developers and support teams teaching the users. 

We are also working to restructure our enlisted curriculum at 

our financial management schoolhouse, where we have moved more 

commercial accounting standards into that training, focusing less 

on teaching people how to use the legacy systems and more on preparing for the future that they will operate in for most of their careers. 

Again, as we move from a traditional focus on manual transaction processing towards more commercial accounting, more cost 

analysis, more issues like that, we have got to prepare the community. And we are leaning forward, and doing that. 

Bottom line, we are keeping our focus on auditability while we 

also work aggressively, strongly to support the warfighter by pro-
10 

viding that sort of world-class decision support through a welltrained, well-educated financial management workforce. 

As I have said before, I very much appreciate the committee’s engagement on this issue and in the broader issue of financial management and DOD. It is helping us to be better, and I thank you 

all for your focus on it. 

[The prepared statement of Secretary Morin can be found in the 

Appendix on page 51.] 

Mr. CONAWAY. All right. Thank you very much. Appreciate that. 

This is probably the most straightforward area of the entire process that we have been investigating as a panel. Everybody understands a little bit about how this thing should go forward, normally, as opposed to some of the more esoteric things that are 

going on. 

Ms. Matiella, you mentioned—and I think I heard in the others— 

that your agencies have done, or your teams have done, for lack of 

a better phrase, an inventory of what you have and try to know 

where you want to get to. 

Ms. Gregory, there are broader areas a lot of the folks out there 

have. Can you talk to us about how you determine what you have, 

what kind of skill sets you already have in place? Is it a formal 

process to evaluate that? 

What kind of attrition plan do you have in place for all of that 

team? Because, you know, if everybody retires at the same time 

that is not going to work, either. Can you visit with us, each of you, 

about just how have you decided what you have in place and where 

you are headed from there? 

Ms. Gregory. 

Ms. GREGORY. Thank you, Mr. Chairman. 

First of all, there are 48,000 civilians and approximately 10,000 

military doing financial management across the Department of Defense. And when we assess what we have in conjunction with—I 

want to step back for a minute—the required Strategic Human 

Capital Plan that we are working with—because now, for the first 

time ever, the Department of Defense at the department level has 

worked with all the Services and components, defense agencies, to 

come up with enterprise-wide competencies. 

So when we issued the first report of the Strategic Human Capital Plan, we did not have enterprise-wide competencies. The Services in some of the large defense agencies had their own separate 

competencies. So we will use it as a benchmark, now that we have 

common competencies that we have been working on. 

So then we will measure. As part of the Strategic Human Capital 

Plan, we will be using those competencies to measure and find out 

what specific gaps we have. So right now we have identified broad 

gaps, for instance such as analytics and in the area of audit readiness. 

And so as we continue to have more specifics we will be able to 

use those competencies that we have developed at five different levels. We use the OPM [Office of Personnel and Management] methodology of developing five different levels within each competencies. 

We have over 23 competencies throughout that are applied to all 

the different occupational series in the 500 financial management 

civilian series. 
11 

So when you say how we look at the workforce, once a quarter, 

Mr. Hale, the Under Secretary of Defense, looks at specific metrics 

throughout financial management. And there is a section there on 

the financial workforce, to include the aging of the workforce, how 

many years that we have been in the workforce, how close we are 

to retirement. 

And right now, our attrition rate is very low. The Federal average, I believe, is around 8 percent. Ours is under 4 percent, and 

last year it was even a little bit lower than that. So our retirements 

are down, our attrition is down. And, of course, the economy is 

driving a lot of that. 

Now having said that, I will talk for one of the large defense 

agencies, Defense Contract Audit Agency. Because they have been 

one of the areas that have brought on around 500 new auditors in 

their specific area. And I just met with some of them at our new 

Defense Civilian Emerging Leadership program, which you authorized back in fiscal year 2010 NDAA to work also on the leadership 

aspect of it. 

So what is interesting is, I met folks who, just to your earlier 

point, we are attracting at this point in time. We are attracting accountants and auditors who have graduate degrees from Yale and 

Columbia. And also I met some from here in George Washington. 

So those are a small sample size, but we are able to attract that. 

We will have to continue to work at what tools we have available; 

that when the economy picks up that they will be tempted, perhaps 

some of the folks, to leave and go the other way. 

We are also very much aware that the younger workforce may 

not have the same ideals as some of the earlier folks who came in, 

that they will probably weave back and forth throughout Federal 

Government and go to the private sector and come back. So we are 

very much attuned to that. Like I said, we look at the statistics, 

we look at what tools we have available, and are using them. 

Secretary MORIN. Yes, sir. On the Air Force side, I would say 

that we do have, as do, I think, pretty much all areas of the Federal Government, medium-to long-term concerns about the health 

of the workforce as we go through a wave of retirements. A very 

substantial share of the Air Force financial management workforce 

is at or approaching retirement age, with really about a third in 

the, you know, age 55-plus category. 

That provides us a wealth of experience and it is a tremendous 

asset but, obviously, people will not remain in the workforce forever. And so we have to keep looking forward. As General Gregory 

said, the retention right now is very good for a variety of reasons, 

but we have to look aggressively forward. 

I will say one interesting nuance in the workforce that makes a 

real difference in the Air Force, and probably for the other Services. As you know, several years ago Congress changed the law and 

allowed dual compensation so that retired military personnel could 

also collect a Federal civilian salary without an offset. 

And since then, there has been a substantial increase in the 

number of retired military, as well as other prior service military, 

in our civilian workforce. It is for the Air Force, over 1,500 of our 

financial management workforce is retired military. 
12 

So they may have a lower number of years of Federal service as 

a civilian, yet a little bit older. There are huge advantages with 

keeping those people on and taking advantage of the skills they 

bring. It also means you get maybe fewer years of civilian service 

out of them, and it requires more transition planning, as well. But 

we do have those issues in front of us, certainly. 

Secretary COMMONS. I believe that our workforce is properly 

sized and that we have the right people, we have the right skill 

mix. So I will focus my attention on how we replenish that workforce. And we allow our local commands to hire, basically. But we 

have two centrally managed programs that we do at my level—the 

financial management intern program, where we bring college students in that have a 3.5 or better grade point average. We do that 

recruiting every single year. We go out to universities. 

We actively recruit people to come in at the 5/7 [GS–5/7] level, 

and that has been very effective over the years. We also have an 

associate program that we centrally manage, where we bring in 

midlevel employees that have experience either in the private sector. They must have a degree. We try to recruit those with advanced degrees. 

So we feel that we are taking action so that if we should have 

retirements, as has been stated, the economy allows us to retain 

people right now. But we actively recruit to replace our personnel 

specifically in those two programs. 

Secretary MATIELLA. We are looking forward. The Army is going 

to have a fully-deployed, compliant accounting system by next year. 

And so this new system is much more integrated, has a lot more 

edits involved in it. So because of the edits, because of its integration, because of its complexity and sophistication we are going to 

need more analysts versus accounting technicians. 

Right now there are a substantial amount of accounting technicians and budget technicians that are working in our legacy systems. Looking forward, our recruitment strategy is to get more accountants, more budget analysts, folks who know how to apply analytics to the data. 

There is going to be less input required by the system because 

that is going to be coming in from our feeder systems, and there 

is going to be more of a requirement to look at anomalies, should 

they exist. And so looking forward, we are looking at our skill set 

and the requirement to recruit those college graduates who are 

able to do the analytics that are going to be required by a new system. 

Mr. CONAWAY. Thank you. 

Mr. Andrews. 

Mr. ANDREWS. Thank you Mr. Chairman. I again thank the witnesses for their preparation. 

Ms. Gregory, you talked about the 20 professional test-based certifications for personnel that you are working on. 

I note that it was the fiscal year 2002 NDAA that gave the Department the legal authority to pay for and support certification 

and credential standards. Where are we, in terms of how many of 

those 20 are ready to be fielded and start giving tests to people? 

Ms. GREGORY. Thank you, Mr. Andrews. First of all, since you 

gave us that authority we have been reimbursing civilians and 
13 

military for the exams they that take for certifications. The 20 testbased certifications are those that are already out there, like 

CPA’s, certified management accountants, certified defense financial managers, et cetera. And they are also in the cost area, and 

in audit and finance. 

But we last year, for instance, reimbursed about $700,000 and 

the year before about $800,000 for the reimbursements. So the 20 

that I mentioned are part of the entire—we are calling it the certification program, similar to the Defense Acquisition Workforce 

Certification program. There will be levels one, two and three so 

that getting a test-based certification will be a part of that. 

Mr. ANDREWS. Are these tests that the Department is going to 

generate itself and give to employees, or some outside organization? 

Ms. GREGORY. No. All the 20 are all outside organizations. So our 

certification will have that as a part of it to give it—— 

Mr. ANDREWS. When we reimburse the employee to prepare for 

that certification, is there any contractual obligation for the employee to stay for a certain number of years after they pass it? 

Ms. GREGORY. I can check, but right now I believe not. 

Mr. ANDREWS. Do you think there should be, or should not be? 

Ms. GREGORY. It would be dependent on—for instance, a lot of 

them are getting certifications are staying with us. They are not 

just taking them and leaving. But we can check into that and see 

what the percentage is. 

[The information referred to can be found in the Appendix on 

page 62.] 

Mr. ANDREWS. I do not have any bias to asking that question. I 

would like to know your opinion because I do not know what the 

right answer is. 

Ms. GREGORY. For instance—— 

Mr. ANDREWS. We certainly do not want to create disincentives 

for people to get the certification and tie them up. But, on the other 

hand, we do not want somebody to get trained on our dime and 

leave. 

Ms. GREGORY. But, for instance, the certification for Certified Defense Financial Manager, which is a frequent one that they receive, 

is only $95.00 a module, or for all three modules is $285.00 per person. So it is a small dime on that one. Now, if you are getting a 

CPA it would be more than that. 

Mr. ANDREWS. Obviously. 

Secretary Commons, you describe this technician that used to 

process vouchers and now we call him or her a financial technician. 

What is the difference, in terms of their responsibilities and their 

compensation? If I were one of these folks previously, what did I 

do and how much money did I make? And now what do I do and 

how much money do I make? 

Secretary COMMONS. Normally, the focus before would be very 

specific. For example, you may be a military pay clerk or you may 

just pull vouchers. Now, what we have said to them is, you need 

to understand more about the entire process. As to being so narrowly focused so that you only understand military pay and how 

that functions, you need to understand civilian pay. 
14 

You need to understand contract vendor pay, and how that process works. So what we did was to try to broaden their skill level 

so that we could better use them instead of just—— 

Mr. ANDREWS. Have them play positions, not just second base or 

not just right field? 

Secretary COMMONS. Yes. 

Mr. ANDREWS. Do you make more money if you can play more 

positions? Do you pay them more? 

Secretary COMMONS. Well, experience, and you are able to move 

up. You are able to move into positions that would pay you more 

because your skill set is not so narrow that you can only apply for 

positions in one particular area. 

Mr. ANDREWS. Gives you more paths to advance your career 

than—— 

Secretary COMMONS. Yes. 

Mr. ANDREWS. Secretary Matiella, do you have any estimate on 

how much the Department of the Army spends a year to train people in the financial field? 

Secretary MATIELLA. I cannot give you a figure right now. I will 

have to get back with you on that. 

Mr. ANDREWS. I would be interested, I think the committee 

would be interested, in seeing that. And then—— 

Secretary MATIELLA. Right. 

Mr. ANDREWS [continuing]. We would like to know whether that 

figure has gone up or down. 

Secretary MATIELLA. Right. 

Mr. ANDREWS. And then what metrics you use to measure how 

effective you think the training has been. 

Secretary MATIELLA. Exactly. We do have quite a very large 

training program. It goes all the way from providing graduate education to providing week-long or hours-long cost training. But I will 

get that information for you. 

[The information referred to can be found in the Appendix on 

page 62.] 

Mr. ANDREWS. We would like to see that—— 

And then, Secretary Morin, the 40 senior audit personnel that 

you are using at AFAA [Air Force Audit Agency], how are those 

people selected? Who picked them, and on what basis? 

Secretary MORIN. Yes, sir. Those folks were selected by the auditor general of the Air Force and his staff. We worked closely—Mr. 

Ted Williams, who is from New York—— 

Mr. ANDREWS. Speaking of baseball, yes, I was going to say ‘‘The 

Splendid Splinter.’’ 

[Laughter.] 

Secretary MORIN. Yes. Unfortunately, Mr. Williams is a Yankees 

fan. 

Mr. ANDREWS. That is unfortunate on a lot of levels, yes, but go 

ahead. 

[Laughter.] 

Secretary MORIN. I have to restrain from comment. My wife is 

also a Yankees fan. 

Mr. ANDREWS. There is counseling for people like that. 

[Laughter.] 

Secretary MORIN. The true challenge is, I am from Detroit. 
15 

Mr. ANDREWS. Uh-oh. Oh, you must have a very strained household this week. 

Secretary MORIN. Mr. Williams and his staff identified specific 

folks reporting to him, and also about 80 specific auditors who were 

working in the field to support that effort. We have a very collegial 

and collaborative relationship, but you do need to maintain an appropriate level of independence between—— 

Mr. ANDREWS. This is the final question. My time is up. What 

skill level do those 40 senior people have that are working at AFAA 

on the financial statement? 

Secretary MORIN. Virtually all of them have graduate degrees 

and a substantial chunk of them are either CPAs or have other 

audit certifications. I can get you the precise numbers—— 

[The information referred to can be found in the Appendix on 

page 62.] 

Mr. ANDREWS. Okay. 

Secretary MORIN. But it is a substantial chunk. 

Mr. ANDREWS. Thank you very much. 

Mr. CONAWAY. Thank you. 

Mr. Young, 5 minutes. 

Mr. YOUNG. Thank you, Mr. Chairman. Thank you to all of our 

witnesses for being here this morning. 

Ms. Gregory, is your department supplementing its financial 

management workforce with contractors? If so, can you give me a 

sense of the extent to which you are doing that, how you make 

those determinations, and what skill sets you are supplementing 

the workforce in? 

Ms. GREGORY. I will speak primarily for a department-wide view 

of it. Yes, we do have contractors, and we look at the different skill 

sets that we need that we are missing. For instance, audit readiness is probably the best example. That we have a large portion of 

auditors because our organic auditors—I should say accountants, 

not the auditors, the accountants—on the organic side predominantly have been used to doing budgetary accounting as opposed 

to proprietary accounting that is now needed to have that skill set. 

That is why we had to ramp up and use contractor support from 

predominantly large accounting firms. Now, throughout, and having been raised in financial management in the Department of Defense for over 30 years, I have worked at every level and I have 

watched us now, particularly since September 11, 2001, when the 

defense budget went up dramatically, we did not throughout—and 

I think we can say this for both Services and the agencies—we did 

not go up proportionately in the staff within financial management. 

So when we had to, for instance, for tracking certain kinds of 

money that came in, for instance for the global war on terrorism, 

that oftentimes we did, on the budget side, hire some contractors 

to do that. 

Now with insourcing and the efficiencies, we have taken a look 

at that—for instance, DFAS, when the insourced Defense Financing and Accounting Service took several hundred contracting positions and converted them into organic positions. 

Mr. YOUNG. So it sounds like your long-term plan is to bring a 

lot of that in-house as you get—— 
16 

Ms. GREGORY. Well, there is a balance. And so that we are looking at, right now, what is the balance. And I think that we have 

got it about right. That we will continue to need a lot of contractor 

support for special projects that we might be working on. Or, for 

instance, definitely for audit readiness we have to have the contractor support. 

Mr. YOUNG. Okay. And for all of our witnesses here if you have 

an answer to this, are you taking efforts pursuant to the Efficiencies Initiative to actually reduce personnel in various areas? It 

is something you may have touched on, but if you could discuss 

that. If so, where are those areas where you are reducing the number of personnel, and what impact is that having on your workforce? 

Secretary MATIELLA. With our new systems, the areas that we 

are reducing personnel are on those personnel that are going to be 

creating, you know, more transactional-level data; the accounting 

technicians, the budget technicians. And we are focusing on not 

growing our workforce. 

So we are going to be left with those accountants, those budget 

analysts that are able to do the analytics. So in the long run, we 

see that our workforce will be reduced because our systems will be 

able to do more and we will rely less on people having to input. 

Secretary COMMONS. We are not, at this time, planning any reduction in the financial management workforce. Again we do believe our workforce is right-sized at this point in time and that we 

are moving forward. So I am not anticipating any reductions. However I must tell you, in the current fiscal environment everything 

is on the table so it does not mean that I will not be subjected to 

some reduction in the financial management workforce. 

What I have done is to ask my major commands to let me know 

if they are experiencing any significant reduction in the financial 

management workforce so that we can take the appropriate action. 

Mr. YOUNG. Where would you start if you were asked right now? 

I mean, what would be the first? You have indicated you are rightsized, but where would you begin to cut? Is that something you 

have contemplated? 

Secretary COMMONS. Not really because I think I have the support of senior leaders—— 

Mr. YOUNG. Okay. 

Secretary COMMONS [continuing]. In that we are focused on 

achieving an auditable financial statement. They support that, they 

understand that we need to put the resources on to achieve that. 

And so I am pretty confident that we can maintain the workforce 

that we have. 

Secretary MORIN. Mr. Young, while our core audit readiness 

workforce is growing and continues to grow, we are moving forward 

on significant overhead efficiencies across the Air Force. And financial management is by no means exempt from that. 

Across the staff that works for me, we have identified already 

about 78 positions worth of efficiency reductions that we can take, 

and we are pressing forward to implement those now. Those are, 

as my colleagues alluded, primarily in transaction processing-type 

activities, where increased reliance on automated systems is helping us to do those more efficiently. 
17 

Mr. YOUNG. Thank you. Our time is up. 

Mr. CONAWAY. Steve. 

Mr. PALAZZO. Well, good morning. Thank you all for being here. 

I have several questions. I am going to kind of jump around a 

little bit. But my colleague here mentioned, he talked about—or the 

insourcing for DFAS was brought up. Can you tell me—I meant to 

ask this question last week, when the DFAS lady was here—how 

many jobs were actually taken from contract and insourced? And 

what was the motivation there? 

Because typically, insourcing is, to me, frowned upon. I think you 

know, if there is a business in the private sector that can do it and 

do it better it should, you know, allow them to deliver it to us. So 

just some of the methodology behind what took us—if you can answer that, please, Ms. Gregory? 

Ms. GREGORY. We can get specifics from the DFAS, but I will just 

give in general terms. There were several hundred positions that 

were moved back in the insourcing. But the key thing is, when 

there was an A–76 requirement to look at this, when we study in 

anything that we outsource, there was always that required by 

OMB Circular A–76, as you know. So they did that, and then the 

dynamics have changed. 

So I would be happy to get more in-depth if you would like to 

have the specifics on DFAS, if you want to know the specific number of people. Because I know Ms. Smith was here last week, and 

I would prefer not to speak in the specifics of that. But I know they 

did—it was more cost-effective than not to bring them in. 

So again, sometimes cost factors changed or the number of people 

that they needed changed. So I would like to come back and take 

that one for the record please. 

[The information referred to can be found in the Appendix on 

page 61.] 

Mr. PALAZZO. Okay. That is—anything you can provide my office 

on that. 

Now I guess in general—you know this might be outside the 

scope, just peaked my curiosity—are there any major insourcing efforts going on, DOD-wide, that you may know of? I remember Secretary Gates saying something about in the middle of the global 

war on terror that he was going to bring 10,000 people back into 

the military. 

Has that happened in the DOD civilian workforce? Has that happened and, if so, what are the amounts we are looking at? 

Ms. GREGORY. I believe the Secretary had mentioned there were 

30,000 positions that we were going to insource, and I can get back 

to you, too, on the specifics of that. I know that effort was lead by 

an area outside of financial management to keep track of it. 

But I know that we also went through the efficiencies drills that 

we are going through now from last year. So there is a point there 

that we can get some more specifics on where we are on that 

30,000. But again, all the Department is stressed on doing what is 

most cost-effective to still get the mission done. 

[The information referred to can be found in the Appendix on 

page 61.] 

Mr. PALAZZO. Okay. I will not dominate the conversation with 

insourcing, but do you all have a hiring preference for veterans 
18 

within the 48,000 workforce? Can you just—is it a point-based system, or is it just subjective? 

We will start over here. Sure. 

Secretary MORIN. Yes, sir, we follow the OPM hiring rules, which 

include veterans’ preference and a special preference for disabled 

veterans. 

Mr. PALAZZO. So that is pretty much the same for everybody? 

Secretary MORIN. Yes sir. 

Mr. PALAZZO. Okay. If you are a CPA or CMA [Certified Management Accountant], and you have gone above and beyond what you 

need to do, and you are striving to be the best in your field, is there 

a financial incentive to be a CPA within the civilian workforce, or 

a CMA or, preferably, a CPA? 

Secretary MATIELLA. I used to be a CPA and a civil servant, and 

the incentive is that you become more promotable. When you are 

competing with others for more responsible positions, I think that 

it certainly helps. In terms of getting greater salaries because you 

are a CPA, no, that is not the case. 

Mr. PALAZZO. Okay. 

Secretary MATIELLA. Now you might get, because of your good 

work, large amounts of award money for good performance. But 

again, that is always tied into actual performance, not to the fact 

that you have a certification. 

Mr. PALAZZO. Okay. You know, in the private sector if you, you know, pass your CPA exam sometimes they will give you a $1,500 

or $2,500 bonus, just depending on, I guess, the level of the firm. 

Within the military, there are 10,000 military personnel that is involved in the DOD finance. How much is officer and how much is 

enlisted? Is it a typical breakdown that y’all know of? 

Ms. GREGORY. We can get that for you across the Department. 

Right now, I just have it at the aggregate level. And that includes 

Guard and Reserve, also, the 10,000 number. So we will take that 

for the record and get that for you approximately. I know, by the 

Services you have it probably have it broken down. 

[The information referred to can be found in the Appendix on 

page 61.] 

Secretary MORIN. Yes, ma’am. For the Air Force, I can tell you 

we have about 900 officers and about 3,800 enlisted. 

Mr. PALAZZO. Do you feel like it is a problem attracting or having 

qualified financial managers in the military side of it? 

Ms. GREGORY. You know, having been one for almost 30 years, 

that in serving with the officers and enlisted on the financial management side, they worked side-by-side, they had the skill sets, 

they were well-trained. So it was a good melting. And, of course, 

the civilians then usually offered more stability in terms of like at 

the installation level in particular. That they would have the longterm knowledge of organizations. 

Mr. PALAZZO. Okay. And just to wrap up, it sure would be nice, 

you know, if you are a CPA in the civilian world and you wanted 

to become—join the military—you know be treated like a lawyer or 

a doctor or a chaplain and go from 01 to maybe an 02 or an 03 slot. 

Just a little incentive there to attract the best and brightest. 

Mr. CONAWAY. All right, thanks. 

Scott. 
19 

Mr. RIGELL. My colleague is a CPA. Good morning, everyone. 

Thank you for being here. Appreciate what you are doing in service 

to our country. And I am convinced and impressed and grateful for 

the level of resolve that I see to accomplish the mission. And I have 

no question that there is a firm commitment to make sure that we 

are audit-ready and we achieve those objectives. 

I know what a challenge it is, certainly at a smaller organization, 

to have everyone understand what the objective is and then work 

toward accomplishing that. And with an organization this large 

that, literally, is around the world and as complex as the Pentagon, 

you know, it is a daunting task. 

But I do want to ask you, Ms. Gregory—I will direct it to you, 

and if others are better suited to answer it, you can also help 

here—but to what extent would—let us say someone who has been 

with the accounting function here for six months or a year or so 

be aware of, would understand and embrace, the audit readiness 

objective in their department and really understand how their department’s contribution plays into the larger role? 

I certainly know it is a challenge, but I do believe to the extent 

that people understand where we are headed overall that we are 

better off. And I will be asking, on our CODELS [Congressional 

Delegations] going forward—and that is military CODELS are essentially all I am doing, you know—I will be asking mid-level managers, ‘‘Are you aware of DOD’s audit readiness goals?’’ 

I am going to push a little bit on that, and I hope to comeback 

and say, ‘‘Look, you are doing a great job on this.’’ Could you comment briefly on that please? 

Ms. GREGORY. Thank you, Congressman. First of all, that is the 

main impetus behind why we are leaning forward on this and getting support from the House and the Senate, which we appreciate. 

But when the under secretary said let us focus on getting the 

whole workforce involved in audit readiness and the importance of 

it. So at level one and level two and level three we will go code 

every position just like the acquisition workforce. And so we will 

have the appropriate level. 

So, for instance, if you are a soldier coming in, or you are GS– 

5, then there will be a program. And we are working right now. 

Matter of fact, our office is physically located with the Deputy 

CFO’s [Chief Financial Officer] financial improvement audit readiness. So every morning we see 60-some people working on that. 

And we are, right now, partnering with them to take the courses 

that they have on financial improvement audit readiness and put 

them online. And then we will also, then, continue partnering with 

them for the appropriate level to have the more difficult awareness 

of all the audit readiness. 

So we are making them aware, putting it as part of the mandatory part of the certification program. So it is one of the main pillars and one of the main focuses. 

Mr. RIGELL. And they understand, I hope, how their individual 

role contributes to the Department, which contributes to this overall. Okay, I am encouraged by that, and hope to come back in several months later on and tell you come good stories about how that 

played out. 
20 

I want to follow up briefly on a theme that I was pursuing at the 

last hearing. And that relates to the difficulty of establishing a 

benchmark for an incoming senior executive, whether it is a general or a captain, a colonel, for his or her command, and establishing that benchmark so that they can be accountable, then, 2 or 

3 years later. 

Secretary Commons, would you please comment on how a senior 

executive or senior leader—we establish that benchmark so we can 

know how they did a couple of years later? 

Secretary COMMONS. Certainly. As I mentioned at our last hearing, we did include a performance goal in each senior executive’s 

performance for the year. And so that will give us a good base of 

did you actually accomplish what we asked you to accomplish, or 

did you not? 

For the flag general officers and our commanders, what we did 

2 years ago is, we actually wrote a plan for each of our major organizations to say this is your contribution to our financial improvement program. And what I had done was to have it signed by the 

commander himself, by the commanding officer. 

Previously, we had really put it down and had the comptroller 

sign it. I thought that was not effective enough. So I, in fact said, 

‘‘I need to have the commanding officers signing this agreement so 

they understand exactly what they have agreed to do, how they 

plan to improve the financial management in their own organization.’’ 

So that is the way we are trying to get it down to each organization and make everybody accountable. 

Mr. RIGELL. Well, you are increasing the accountability. I applaud that. Thank you so much. 

I yield back. 

Mr. CONAWAY. I thank the gentleman. Anyone else on the panel 

have a second round? Okay. 

A couple of this and that. The CPAs and others have annual continuing professional education requirements and others. Do you reimburse these employees for maintaining their certificates, or their 

licenses? 

Ms. GREGORY. Yes, we do. And also as part of our DOD certification program, although we are encouraging them to have one of 

those 20 test-based certificates it is also going to be that it is going 

to be mandatory that they have so many CPEs, Continuing Professional Education credits. And that will be part of the training 

budget that they will request and receive. 

Mr. CONAWAY. All right. 

Ms. Matiella, you mentioned some sort of an existing audit program for 2011 through 2014. I could not figure out what you are 

auditing. What is it that you are—in your testimony, you talked— 

I thought it had to do with human resources. But what is it that 

you are auditing each year? 

Secretary MATIELLA. Well we are conducting audit examinations 

at all of the installations that have already implemented GFEBS 

[General Fund Enterprise Business System] to make sure—— 

Mr. CONAWAY. Oh, okay. 

Secretary MATIELLA [continuing]. That they have implemented 

our new accounting system correctly, that they are practicing the 
21 

right technique and that they are becoming compliant not only in 

the systems but in their processes. And we believe by having these 

examinations every single year that it is also a learning experience 

for the people who are going through the examination. 

They are understanding what is required by the auditors. They 

have a better understanding of what compliant practices are. And 

so it is not only work for them, but it is also a learning opportunity 

for them in terms of what is auditability about. 

Mr. CONAWAY. Okay, all right. I understand. Thank you very 

much. 

Well, closing comments, Rob? 

Mr. ANDREWS. Well I would like to thank the chairman, thank 

the witnesses. I hear that we are all moving in the same direction, 

which is good. That there is this level of commitment that Mr. 

Rigell just talked about throughout the Services to getting these 

audits done. 

I think in this subsection of discussion, though, that I heard another goal articulated today that I hope we all follow up on. Which 

is that on a permanent basis, a financial management professional 

is a person held in very high esteem and supported, both in the 

uniform track in terms of promotion for the uniform personnel, and 

the civilian track. 

That this becomes, you know, one of the career-building things 

that people want to do. And, you know, that is obviously a challenge because there are so many dramatic and heroic and significant things that people in the Department of Defense do, both uniform and non-uniform. Thank God they do them. 

And those are, you know, things that we are very grateful as a 

country that people do. They cannot do their jobs if you all do not 

do yours. If the infrastructure is not there to support those who do 

the most difficult missions the difficult missions become a lot more 

difficult. So what we are looking for is ways—financially, educationally, in terms of pride and self-respect and self-esteem—that we 

can elevate these professions within our department. 

Obviously, government-bashing is very much in vogue. And I do 

not mean that as any ideological criticism, it comes with the territory. We all sort of understand that. But the reality, a lot of what 

people do is really very good. And I think we have to find a way 

to motivate people who do that good work with compensation, but 

also with praise and with professional esteem. 

And I think each one of you has exemplified that in your own careers, in your own work, and your work here this morning. So we 

would like to create that kind of environment where young men 

and women like you decide to go into this field and excel at it. Because the country will be better. So thank you. 

Mr. CONAWAY. Thank the gentleman. 

One of the things that we hope this panel has put together is an 

ongoing way to assess that we are on track with this overall goal 

that everybody wants to get to. And like Scott said, I appreciate 

and sense the resolve you bring to the table to make this happen. 

One of the things that will happen next year. It may not be this 

group, but one of the things that will happen next year, we hope, 

is that we will look at those performance evaluations. That we will 

say, ‘‘Okay, here is what happened across the spectrum of those. 
22 

Some folks did it really well and some folks didn’t. And for those 

folks who didn’t do it well, there are consequences.’’ 

‘‘And for those folks who did it well, there are really the appropriate consequences, as well, because we just simply have to make 

this happen.’’ And I know you agree with me in that regard. But 

the one of the things it will do is to see how well this system works 

in terms of keeping the civilian workforce which has it specifically 

in their performance evaluation plans, as well as the military side 

who are responsible for making it happen also. 

We just simply have to hold each other accountable for doing the 

good job that must be done. And as we open this hearing this 

morning, it is all about the people. You cannot make this thing 

work without good people, well-compensated, proud of the work 

they do, and knowing that the Nation is proud of them as well. 

So, gentlemen, thank you very much and we will adjourn. 

[Whereupon, at 9:05 a.m., the panel was adjourned.] 
A P P E N D I X 

OCTOBER 6, 2011 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

OCTOBER 6, 2011 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

OCTOBER 6, 2011 

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RESPONSES TO QUESTIONS SUBMITTED BY MR. PALAZZO 

Ms. GREGORY. From April 2009, when Secretary Gates announced an initiative to 

rebalance the Department’s workforce and reduce reliance on contracted services, 

through October 2011, the Defense Finance and Accounting Services (DFAS) has 

formally converted a total of 668 positions previously performed by contractors to 

Government positions. The majority, 606 positions, represent the Retired & Annuitant (R&A) Pay function that was converted on February 1, 2010. 

The motivation to insource was compliance with Section 324 and Section 807 of 

the NDAA for Fiscal Year 2008, Public Law 110–181, January 28, 2008. Section 324 

required the Department to create guidelines and procedures to ensure that consideration is given to using DOD civilians to perform new functions or functions that 

are performed by contractors. Section 807 required the Department to create an inventory of service contracts for reporting purposes. Insourcing is also a valuable 

means to achieve cost savings. 

DFAS used the Agency Section 807 service contract inventory as a baseline to 

identify insourcing opportunities from the pool of existing service contracts. For each 

contract selected, we then executed a business case analysis which primarily compared the cost of contractor performance with the cost of Government performance. 

This cost analysis was performed in compliance with Department policy and instruction. We also examined additional relevant items such as mission impact, customer 

service, and the ability to recruit and sustain Government workforce for certain skill 

sets. Cognizant senior leaders then made fact-based, best value business decisions 

on insourcing each contract. 

DFAS has used insourcing to get a full picture of its total workforce (General 

Schedule and Contractor) and make sure we are achieving the right overall manpower mix that will allow DFAS to manage costs more responsibly for the Department and the warfighter. [See page 17.] 

Ms. GREGORY. In April 2009, Secretary Gates announced an initiative to rebalance 

the Department’s workforce and reduce reliance on contracted services. As part of 

this insourcing initiative, the Department planned on establishing more than 30,000 

new civilian positions by FY 2015, including 10,000 specifically in support of the acquisition workforce. In FY 2010, the Department established nearly 17,000 new civilian positions as a result of insourcing contracted services, of which approximately 

1,100 were in the financial management workforce. Through the third quarter of FY 

2011, an additional 5,300 civilian positions have been established as a result of 

insourcing contracted services, including more than 200 in the financial management workforce. 

Insourcing has been, and continues to be, a very effective tool used by the Department to rebalance the workforce, realign inherently governmental and other critical 

work to Government performance (from contract support), and in many instances 

to generate resource efficiencies. While the Department, as part of its Efficiency Initiative, has been asked to hold to FY 2010 civilian funding levels, with some exceptions, for the next three years, we remain committed to meeting statutory obligations to annually review contracted services, identifying those that are inappropriately being performed by the private sector and should be insourced to Government 

performance. These include services that are inherently governmental or closely associated with inherently governmental in nature; may otherwise be exempted from 

private sector performance (to mitigate risk, ensure continuity of operations, build 

internal capability, meet and maintain readiness requirements, etc); or can be more 

cost effectively delivered by the Government. Those contracted services that meet 

the necessary criteria (consistent with governing statutes, policies, and regulations) 

will be insourced by absorbing work into existing Government positions by refining 

duties or requirements; establishing new positions to perform contracted services by 

eliminating or shifting equivalent existing manpower resources (personnel) from 

lower priority activities; or on a case-by-case basis, requesting an exception to the 

civilian funding levels. [See page 17.] 

Ms. GREGORY. The breakout of Active Duty officer and enlisted in financial management positions is, 1,912 for officers and 6,164 for enlisted for a total of 8,076. 

Specific information on the Reserve components is not readily available. The total 
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approximate number of Reserves in financial management positions is 2,000. The 

ratio of officer and enlisted in the Reserves should be similar to the Active Duty. 

[See page 18.] 

RESPONSES TO QUESTIONS SUBMITTED BY MR. ANDREWS 

Ms. GREGORY. According to the Department of Defense (DOD) Civilian Personnel 

Management System: Training, Education, and Professional Development (Number 

1400.25, Vol 410) regulation states a Continuing Service Agreement (CSA) is required for training that exceeds 80 hours, at a minimum. DOD Components may 

establish lower minimums as appropriate. A CSA must include provisions for an 

employee to reimburse the DOD Component for training costs, except pay or other 

compensation, if the employee voluntarily or involuntarily separates from service in 

the Federal Government before completing the agreed period of service. 

The Authorization, Agreement and Certification of Training form states that if an 

employee voluntarily leaves the agency before completing the period of service 

agreed to, he/she will reimburse the agency for fees, such as the tuition and related 

fees, travel, and other special expenses (excluding salary) paid in connection with 

training. [See page 13.] 

Secretary MATIELLA. Army civilian financial management training and professional development were executed through colleges and universities at $3.3 million 

in fiscal year 2009, $3.9 million in fiscal year 2010, and $3.6 million fiscal year 

2011. For active Army military personnel, we spent $3.3 million in fiscal year 2010 

and remained steady at $3.3 million in fiscal year 2011. 

Our Army learning institutions and universities routinely use evaluations, performance test and course critiques to improve how they train and educate Soldiers 

and Army Civilians. We use the feedback from their measuring tools to develop and 

implement relevant training and education to meet the students’ competency needs. 

[See page 14.] 

Secretary MORIN. The AFAA staff working on financial statement audit support 

are extremely experienced. There are 41 people in AFAA working on the financial 

statement. Most are at the grade of GS–13. In terms of education, 13 have BS Degrees and 27 have Masters Degrees. Of that total, 59% (24 people) have relevant 

certifications like Certified Internal Auditor (CIA), Certified Defense Financial Manager (CDFM), and Certified Public Accountant (CPA). The average number of years 

of financial management and audit experience is 20. In addition to the post secondary education and extensive financial management and audit experience, each 

auditor is required to hone their professional skills with a total of 80 Continuing 

Professional Education (CPE) hours over a two-year period. [See page 15.] 

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