fense, to publish ‘‘a regular statement and account 
of the receipts and expenditures of all public 
money’’. 
(2) Section 3515 of title 31, United States 
Code, requires the agencies of the Federal Govern-
ment, including the Department of Defense, to 
present auditable financial statements beginning not 
later than March 1, 1997. The Department has not 
complied with this law. 
(3) The Federal Financial Management Im-
provement Act of 1996 (31 U.S.C. 3512 note) re-
quires financial systems acquired by the Federal 
Government, including the Department of Defense, 
to be able to provide information to leaders to man-
age and control the cost of Government. The De-
partment has not complied with this law. 
(4) The financial management of the Depart-
ment of Defense has been on the ‘‘High-Risk’’ list 
of the Government Accountability Office, which 
means that the Department is not consistently able 
to ‘‘control costs; ensure basic accountability; antici-
pate future costs and claims on the budget; measure 
performance; maintain funds control; [and] prevent 
and detect fraud, waste, and abuse’’. 
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(5) The National Defense Authorization Act for 
Fiscal Year 2002 (Public Law 107–107) requires 
the Secretary of Defense to report to Congress an-
nually on the reliability of the financial statements 
of the Department of Defense, to minimize resources 
spent on producing unreliable financial statements, 
and to use resources saved to improve financial man-
agement policies, procedures, and internal controls. 
(6) In 2005, the Department of Defense cre-
ated a Financial Improvement and Audit Readiness 
(FIAR) Plan, overseen by a directorate within the 
office of the Under Secretary of Defense (Comp-
troller), to improve Department business processes 
with the goal of producing timely, reliable, and accu-
rate financial information that could generate an 
audit-ready annual financial statement. In December 
2005, that directorate, known as the FIAR Direc-
torate, issued the first of a series of semiannual re-
ports on the status of the Financial Improvement 
and Audit Readiness Plan. 
(7) The National Defense Authorization Act for 
Fiscal Year 2010 (Public Law 111–84) requires reg-
ular status reports on the Financial Improvement 
and Audit Readiness Plan described in paragraph 
(6), and codified as a statutory requirement the goal 
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of the Plan in ensuring that Department of Defense 
financial statements are validated as ready for audit 
not later than September 30, 2017. In addition, the 
National Defense Authorization Act for Fiscal Year 
2013 (Public Law 112–239) requires that the state-
ment of budgetary resources of the Department of 
Defense be validated as ready for audit by not later 
than September 30, 2014. 
(8) At a September 2010 hearing of the Senate, 
the Government Accountability Office stated that 
past expenditures by the Department of Defense of 
$5,800,000,000 to improve financial information, 
and billions of dollars more of anticipated expendi-
tures on new information technology systems for 
that purpose, may not suffice to achieve full audit 
readiness of the financial statements of the Depart-
ment. At that hearing, the Government Account-
ability Office could not predict when the Department 
would achieve full audit readiness of such state-
ments. 
SEC. 3. CESSATION OF APPLICABILITY OF REPORTING RE-
QUIREMENTS REGARDING THE FINANCIAL 
STATEMENTS OF THE DEPARTMENT OF DE-
FENSE. 
(a) CESSATION OF APPLICABILITY.— 
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(1) MILITARY
DEPARTMENTS.—The financial 
statements of a military department shall cease to 
be covered by the reporting requirements specified in 
subsection (b) upon the issuance of an unqualified 
audit opinion on such financial statements. 
(2) DEPARTMENT OF DEFENSE.—The reporting 
requirements specified in subsection (b) shall cease 
to be effective when an unqualified audit opinion is 
issued on the financial statements of the Depart-
ment of Defense, including each of the military de-
partments and the other reporting entities defined 
by the Office of Management and Budget. 
(b) REPORTING REQUIREMENTS.—The reporting re-
quirements specified in this subsection are the following: 
(1) The requirement for annual reports in sec-
tion 892(b) of the Ike Skelton National Defense Au-
thorization Act for Fiscal Year 2011 (Public Law 
111–383; 124 Stat. 4311; 10 U.S.C. 2306a note). 
(2) The requirement for semi-annual reports in 
section 1003(b) of the National Defense Authoriza-
tion Act for Fiscal Year 2010 (Public Law 111–84; 
123 Stat. 2440; 10 U.S.C. 2222 note). 
(3) The requirement for annual reports in sec-
tion 817(d) of the Bob Stump National Defense Au-
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thorization Act for Fiscal Year 2003 (10 U.S.C. 
2306a note). 
(4) The requirement for annual reports in sec-
tion 1008(a) of the National Defense Authorization 
Act for Fiscal Year 2002 (Public Law 107–107; 115 
Stat. 1204; 10 U.S.C. 113 note). 
(5) The requirement for periodic reports in sec-
tion 908(b) of the Defense Acquisition Improvement 
Act of 1986 (Public Law 99–500; 100 Stat. 1783– 
140; 10 U.S.C. 2326 note) and duplicate require-
ments as provided for in section 6 of the Defense 
Technical Corrections Act of 1987 (Public Law 100– 
26; 101 Stat. 274; 10 U.S.C. 2302 note). 
SEC. 4. ENHANCED REPROGRAMMING AUTHORITY FOL-
LOWING ACHIEVEMENT BY DEPARTMENT OF 
DEFENSE AND MILITARY DEPARTMENTS OF 
AUDIT 
WITH 
UNQUALIFIED 
OPINION 
OF 
STATEMENT 
OF 
BUDGETARY 
RESOURCES 
FOR FISCAL YEARS AFTER FISCAL YEAR 2014. 
(a) DEPARTMENT OF DEFENSE GENERALLY.—Sub-
ject to section 6(1), if the Department of Defense obtains 
an audit with an unqualified opinion on its statement of 
budgetary resources for any fiscal year after fiscal year 
2014, the limitation on the total amount of authorizations 
that the Secretary of Defense may transfer pursuant to 
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general transfer authority available to the Secretary in the 
national interest in the succeeding fiscal year shall be 
$8,000,000,000. 
(b) MILITARY DEPARTMENTS, DEFENSE AGENCIES, 
AND DEFENSE FIELD ACTIVITIES.—Subject to section 
7(a), if a military department, Defense Agency, or defense 
field activity obtains an audit with an unqualified opinion 
on its statement of budgetary resources for any fiscal year 
after fiscal year 2014, the thresholds for reprogramming 
of funds of such military department, Defense Agency, or 
defense field activity, as the case may be, without prior 
notice to Congress for the succeeding fiscal year shall be 
deemed to be the thresholds as follows: 
(1) In the case of an increase or decrease to the 
program base amount for a procurement program, 
$60,000,000. 
(2) In the case of an increase or decrease to the 
program base amount for a research program, 
$30,000,000. 
(3) In the case of an increase or decrease to the 
amount for a budget activity for operation and 
maintenance, $45,000,000. 
(4) In the case of an increase or decrease to the 
amount for a budget activity for military personnel, 
$30,000,000. 
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(c) CONSTRUCTION.—Nothing in this section shall be 
construed to alter or revise any requirement (other than 
a threshold amount) for notice to Congress on transfers 
covered by subsection (a) or reprogrammings covered by 
subsection (b) under any other provision of law. 
(d) DEFINITIONS.—In this section, the terms ‘‘pro-
gram base amount’’, ‘‘procurement program’’, ‘‘research 
program’’, and ‘‘budget activity’’ have the meanings given 
such terms in chapter 6 of volume 3 of the Financial Man-
agement Regulation of the Department of Defense (DoD 
7000.14R), dated March 2011, or any successor docu-
ment. 
SEC. 5. FAILURE TO OBTAIN AUDITS WITH UNQUALIFIED 
OPINION OF FISCAL YEAR 2015 GENERAL 
FUND 
STATEMENT 
OF 
BUDGETARY 
RE-
SOURCES OF THE DEPARTMENT OF DE-
FENSE. 
(a) IN GENERAL.—If the Department of Defense 
fails to obtain an audit with an unqualified opinion on its 
general fund statement of budgetary resources for fiscal 
year 2015 by December 31, 2015, the following shall take 
effect on January 1, 2016: 
(1) ADDITIONAL QUALIFICATIONS AND DUTIES 
OF USD (COMPTROLLER).— 
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(A) 
QUALIFICATIONS.—Any 
individual 
nominated for appointment to the position of 
Under Secretary of Defense (Comptroller) 
under section 135 of title 10, United States 
Code, shall be an individual who has served— 
(i) as the chief financial officer of a 
Federal or State agency that has received 
an audit with an unqualified opinion on 
such agency’s financial statements during 
the time of such individual’s service; or 
(ii) as the chief financial officer of a 
public company that has received an audit 
with an unqualified opinion on such com-
pany’s financial statements during the 
time of such individual’s service. 
(B) DUTIES
AND
POWERS.—The duties 
and powers of the individual serving as Under 
Secretary of Defense (Comptroller) shall in-
clude, in addition to the duties and powers 
specified in section 135(c) of title 10, United 
States Code, such duties and powers with re-
spect to the financial management of the De-
partment of Defense as the Deputy Secretary of 
Defense (acting in the capacity of Chief Man-
agement Officer of the Department of Defense) 
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or a successor official in the Department of De-
fense (acting in such capacity) may prescribe. 
(2) ADDITIONAL QUALIFICATIONS AND RESPON-
SIBILITIES OF ASA FOR FINANCIAL MANAGEMENT.— 
(A) 
QUALIFICATIONS.—Any 
individual 
nominated for appointment to the position of 
Assistant Secretary of the Army for Financial 
Management under section 3016 of title 10, 
United States Code, shall be an individual who 
has served— 
(i) as the chief financial officer of a 
Federal or State agency that has received 
an audit with an unqualified opinion on 
such agency’s financial statements during 
the time of such individual’s service; or 
(ii) as the chief financial officer of a 
public company that has received an audit 
with an unqualified opinion on such com-
pany’s financial statements during the 
time of such individual’s service. 
(B) RESPONSIBILITIES.—The responsibil-
ities of the individual serving as Assistant Sec-
retary of the Army for Financial Management 
shall include, in addition to the responsibilities 
specified in section 3016(b)(4) of title 10, 
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United States Code, such responsibilities as the 
Deputy Secretary of Defense (acting in the ca-
pacity of Chief Management Officer of the De-
partment of Defense) or a successor official in 
the Department of Defense (acting in such ca-
pacity) may prescribe. 
(3) ADDITIONAL QUALIFICATIONS AND RESPON-
SIBILITIES OF ASN FOR FINANCIAL MANAGEMENT.— 
(A) 
QUALIFICATIONS.—Any 
individual 
nominated for appointment to the position of 
Assistant Secretary of the Navy for Financial 
Management under section 5016 of title 10, 
United States Code, shall be an individual who 
has served— 
(i) as the chief financial officer of a 
Federal or State agency that has received 
an audit with an unqualified opinion on 
such agency’s financial statements during 
the time of such individual’s service; or 
(ii) as the chief financial officer of a 
public company that has received an audit 
with an unqualified opinion on such com-
pany’s financial statements during the 
time of such individual’s service. 
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(B) RESPONSIBILITIES.—The responsibil-
ities of the individual serving as Assistant Sec-
retary of the Navy for Financial Management 
shall include, in addition to the responsibilities 
specified in section 5016(b)(3) of title 10, 
United States Code, such responsibilities as the 
Deputy Secretary of Defense (acting in the ca-
pacity of Chief Management Officer of the De-
partment of Defense) or a successor official in 
the Department of Defense (acting in such ca-
pacity) may prescribe. 
(4) ADDITIONAL QUALIFICATIONS AND RESPON-
SIBILITIES
OF
ASAF
FOR
FINANCIAL
MANAGE-
MENT.— 
(A) 
QUALIFICATIONS.—Any 
individual 
nominated for appointment to the position of 
Assistant Secretary of the Air Force for Finan-
cial Management under section 8016 of title 10, 
United States Code, shall be an individual who 
has served— 
(i) as the chief financial officer of a 
Federal or State agency that has received 
an audit with an unqualified opinion on 
such agency’s financial statements during 
the time of such individual’s service; or 
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(ii) as the chief financial officer of a 
public company that has received an audit 
with an unqualified opinion on such com-
pany’s financial statements during the 
time of such individual’s service. 
(B) RESPONSIBILITIES.—The responsibil-
ities of the individual serving as Assistant Sec-
retary of the Air Force for Financial Manage-
ment shall include, in addition to the respon-
sibilities specified in section 8016(b)(3) of title 
10, United States Code, such responsibilities as 
the Deputy Secretary of Defense (acting in the 
capacity of Chief Management Officer of the 
Department of Defense) or a successor official 
in the Department of Defense (acting in such 
capacity) may prescribe. 
(b) PUBLIC COMPANY DEFINED.—In this section, the 
term ‘‘public company’’ has the meaning given the term 
‘‘issuer’’ in section 2(a)(7) of the Sarbanes-Oxley Act of 
2002 (15 U.S.C. 7201(7)). 
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SEC. 6. FAILURE OF THE DEPARTMENT OF DEFENSE TO OB-
TAIN AUDITS WITH UNQUALIFIED OPINION 
OF FISCAL YEAR 2018 FINANCIAL STATE-
MENTS. 
If the Department of Defense fails to obtain an audit 
with an unqualified opinion on its general fund statement 
of budgetary resources for fiscal year 2018 by December 
31, 2018: 
(1) PERMANENT
CESSATION
OF
ENHANCED 
GENERAL
TRANSFER
AUTHORITY.—Effective as of 
January 1, 2019, the authority in section 4(a) shall 
cease to be available to the Department of Defense 
for fiscal year 2018 and any fiscal year thereafter. 
(2) REORGANIZATION OF RESPONSIBILITIES OF 
CHIEF
MANAGEMENT
OFFICER.—Effective as of 
April 1, 2019: 
(A) POSITION OF CHIEF MANAGEMENT OF-
FICER.—Section 132a of title 10, United States 
Code, is amended to read as follows: 
‘‘§ 132a. Chief Management Officer 
‘‘(a) IN GENERAL.—(1) There is a Chief Manage-
ment Officer of the Department of Defense, appointed 
from civilian life by the President, by and with the advice 
and consent of the Senate. 
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‘‘(2) Any individual nominated for appointment as 
Chief Management Officer shall be an individual who 
has— 
‘‘(A) extensive executive level leadership and 
management experience in the public or private sec-
tor; 
‘‘(B) strong leadership skills; 
‘‘(C) a demonstrated ability to manage large 
and complex organizations; and 
‘‘(D) a proven record in achieving positive oper-
ational results. 
‘‘(b) POWERS AND DUTIES.—The Chief Management 
Officer shall perform such duties and exercise such powers 
as the Secretary of Defense may prescribe. 
‘‘(c) SERVICE AS CHIEF MANAGEMENT OFFICER.— 
(1) The Chief Management Officer is the Chief Manage-
ment Officer of the Department of Defense. 
‘‘(2) In serving as the Chief Management Officer of 
the Department of Defense, the Chief Management Offi-
cer shall be responsible for the management and adminis-
tration of the Department of Defense with respect to the 
following: 
‘‘(A) The expenditure of funds, accounting, and 
finance. 
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‘‘(B) Procurement, including procurement of 
any enterprise resource planning (ERP) system and 
any information technology (IT) system that is a fi-
nancial feeder system, human resources system, or 
logistics system. 
‘‘(C) Facilities, property, nonmilitary equip-
ment, and other resources. 
‘‘(D) Strategic planning, annual performance 
planning, and identification and tracking of perform-
ance measures. 
‘‘(E) Internal audits and management analyses 
of the programs and activities of the Department, 
including the Defense Contract Audit Agency. 
‘‘(F) Such other areas or matters as the Sec-
retary of Defense may designate. 
‘‘(3) The head of the Defense Contract Audit Agency 
shall be under the supervision of, and shall report directly 
to, the Chief Management Officer. 
‘‘(d) PRECEDENCE.—The Chief Management Officer 
takes precedence in the Department of Defense after the 
Secretary of Defense and the Deputy Secretary of De-
fense.’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Section 131(b) of title 10, United 
States Code, is amended— 
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(I) by striking paragraph (3); 
(II) by redesignating paragraph 
(2) as paragraph (3); and 
(III) by inserting after paragraph 
(1) the following new paragraph (2): 
‘‘(2) The Chief Management Officer of the De-
partment of Defense.’’. 
(ii) Section 132 of such title is 
amended— 
(I) by striking subsection (c); 
and 
(II) by redesignating subsections 
(d) and (e) as subsections (c) and (d), 
respectively. 
(iii) Section 133(e)(1) of such title is 
amended by striking ‘‘and the Deputy Sec-
retary of Defense’’ and inserting ‘‘, the 
Deputy Secretary of Defense, and the 
Chief Management Officer of the Depart-
ment of Defense’’. 
(iv) Such title is further amended by 
inserting ‘‘the Chief Management Officer 
of the Department of Defense,’’ after ‘‘the 
Deputy Secretary of Defense,’’ each place 
it appears in the provisions as follows: 
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(I) Section 133(e)(2). 
(II) Section 134(c). 
(v) Section 137a(d) of such title is 
amended by striking ‘‘the Secretaries of 
the military departments,’’ and all that fol-
lows and inserting ‘‘the Chief Management 
Officer of the Department of Defense, the 
Secretaries of the military departments, 
and the Under Secretaries of Defense.’’. 
(vi) Section 138(d) of such title is 
amended by striking ‘‘the Secretaries of 
the military departments,’’ and all that fol-
lows through the period and inserting ‘‘the 
Chief Management Officer of the Depart-
ment of Defense, the Secretaries of the 
military departments, the Under Secre-
taries of Defense, and the Director of De-
fense Research and Engineering.’’. 
(C) CLERICAL AMENDMENT.—The table of 
sections at the beginning of chapter 4 of such 
title is amended by striking the item relating to 
section 132a and inserting the following new 
item: 
‘‘132a. Chief Management Officer.’’. 
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(D) 
EXECUTIVE
SCHEDULE.—Section 
5313 of title 5, United States Code, is amended 
by adding at the end the following: 
‘‘Chief Management Officer of the Department 
of Defense.’’. 
(E) REFERENCE IN LAW.—Any reference 
in any provision of law to the Chief Manage-
ment Officer of the Department of Defense 
shall be deemed to refer to the Chief Manage-
ment Officer of the Department of Defense 
under section 132a of title 10, United States 
Code (as amended by this paragraph). 
(3) JURISDICTION OF DFAS.—Effective as of 
April 1, 2019: 
(A) TRANSFER TO DEPARTMENT OF THE 
TREASURY.—Jurisdiction of the Defense Fi-
nance and Accounting Service (DFAS) is trans-
ferred from the Department of Defense to the 
Department of the Treasury. 
(B) ADMINISTRATION.—The Secretary of 
the Treasury shall administer the Defense Fi-
nance and Accounting Service following transfer 
under this paragraph through the Financial 
Management Service of the Department of the 
Treasury. 
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SEC. 7. FAILURE OF THE MILITARY DEPARTMENTS TO OB-
TAIN AUDITS WITH UNQUALIFIED OPINION 
OF FINANCIAL STATEMENTS FOR FISCAL 
YEARS AFTER FISCAL YEAR 2017. 
(a) PERMANENT CESSATION OF AUTHORITIES ON 
REPROGRAMMING OF FUNDS.—If a military department 
fails to obtain an audit with an unqualified opinion on its 
financial statements for fiscal year 2018 by December 31, 
2018, effective as of January 1, 2019, the authorities in 
section 4(b) shall cease to be available to the military de-
partment for fiscal year 2018 and any fiscal year there-
after. 
(b) ANNUAL PROHIBITION
ON EXPENDITURE
OF 
FUNDS FOR CERTAIN MDAPS PAST MILESTONE B IN 
CONNECTION WITH FAILURE.— 
(1) PROHIBITION.—Effective for fiscal years 
after fiscal year 2017, if a military department fails 
to obtain an audit with an unqualified opinion on its 
financial statements for any fiscal year, effective as 
of the date of the issuance of the opinion on such 
audit, amounts available to the military department 
for the following fiscal year may not be obligated by 
the military department for a weapon or weapon sys-
tem or platform being acquired as a major defense 
acquisition program for any activity beyond Mile-
stone B approval unless such program has already 
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achieved Milestone B approval as of the date of the 
issuance of the opinion on such audit. 
(2) DEFINITIONS.—In this subsection: 
(A) The term ‘‘major defense acquisition 
program’’ has the meaning given that term in 
section 2430 of title 10, United States Code. 
(B) The term ‘‘Milestone B approval’’ has 
the meaning given that term in section 
2366(e)(7) of title 10, United States Code. 
SEC. 8. ENTERPRISE RESOURCE PLANNING. 
The Secretary of Defense shall amend the acquisition 
guidance of the Department of Defense to provide for the 
following: 
(1) The Defense Business System Management 
Committee may not approve procurement of any En-
terprise Resource Planning (ERP) business system 
that is independently estimated to take longer than 
three years to procure from initial obligation of 
funds to full deployment and sustainment. 
(2) Any contract for the acquisition of an En-
terprise Resource Planning business system shall in-
clude a provision authorizing termination of the con-
tract at no cost to the Government if procurement 
of the system takes longer than three years from ini-
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tial obligation of funds to full deployment and 
sustainment. 
(3) Any implementation of an Enterprise Re-
source Planning system shall comply with each of 
the following: 
(A) The current Business Enterprise Ar-
chitecture established by the Chief Management 
Officer of the Department of Defense. 
(B) The provisions of section 2222 of title 
10, United States Code. 
(4) The Deputy Secretary of Defense (acting in 
the capacity of Chief Management Officer of the De-
partment of Defense) or a successor official in the 
Department of Defense (acting in such capacity) 
shall have the authority to replace any program 
manager (whether in a military department or a De-
fense Agency) for the procurement of an Enterprise 
Resource Planning business system if procurement 
of the system takes longer than three years from ini-
tial obligation of funds to full deployment and 
sustainment. 
(5) Any integrator contract for the implementa-
tion of an Enterprise Resource Planning business 
system shall only be awarded to companies that have 
a history of successful implementation of other En-
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terprise Resource Planning business systems for the 
Federal Government (whether with the Department 
of Defense or another department or agency of the 
Federal Government), including meeting cost and 
schedule goals. 
Æ 
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