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17 Nov 22. USMC budget chief optimistic about upcoming 2024 proposal.
The head of U.S. Marine Corps budgets said he’s more confident the Corps’ needs will be addressed in the upcoming fiscal 2024 budget than he was at this time last year about the FY23 budget.
In the last two budget cycles, several of the Marines’ needs have been pushed out of the budget, as the Navy — which funds the construction and maintenance of the amphibious ships the Marines use — grapples with more needs than it can afford.
In FY22, the Marines wanted to start buying their light amphibious warship, but it didn’t make the cut for the budget request. In FY23, the Navy announced it would decommission four Whidbey Island-class amphibious dock landing ships early, buy one last San Antonio-class amphibious transport dock before ending the production line and postpone the construction of the next America-class amphibious assault ship to 2031.
The Marines rely on these larger ships to haul Marine Expeditionary Units, and they want the new light amphibious warship to move around smaller formations as part of emerging operational concepts.
Deputy Commandant for Programs and Resources Lt. Gen. Christopher Mahoney, speaking Thursday at a Marine Corps Association event, referred to Marine items cut in the FY23 budget-making process as ones “we were trying to defend, that we were trying to appeal, that we were trying to recover and get those resources back.”
The Marines appeared to be facing a similar challenge earlier this fall, as the Navy and Marine Corps worked to craft a 2024 budget request for the Pentagon’s review. Defense News previously reported the Navy was considering decommissioning another four amphibious ships ahead of their planned retirement.
As the mid-October deadline to finalize the Department of Navy request grew closer, however, Assistant Commandant of the Marine Corps Gen. Eric Smith told Defense News top Navy and Marine Corps leadership were “making genuine progress to ensure that operational commanders have the amphibious ships they need to execute the missions they have been assigned.”
Neither the Navy nor the Marine Corps has disclosed the details of a potential compromise.
“We’ll see what happens in the budget, but as I stand here right now, going into the … post-program review for ‘24, I feel a lot better,” Mahoney said. “Whether it’s wholeness of the program costs, scheduled performance of each of our [major acquisition programs] or other items, I feel better.”
He noted Congress still hadn’t passed a defense authorization bill or a defense spending bill for the current year — the government is operating under a continuing resolution — and that creates some uncertainty. But he insisted he’s in a much improved position.
Mahoney, who spoke at length about the Marines’ vision for its future under its Force Design 2030 modernization effort, said early talks about the FY25 submission are already taking place, and the clarity of the requirement for Marine spending in outyears makes him “feel very, very good about how we entered into the planning and then the programming phase of ‘25.” (Source: Defense News)
15 Nov 22. DOD Completes Department-Wide Financial Statement Audit; Essential Catalyst for Business Transformation and Modernization.
The fifth annual Department-wide financial statement audit resulted in a disclaimer of opinion, however significant progress was achieved. Seven Components have received unmodified opinions and one received a qualified opinion. Opinions for the Office of Inspector General and the Defense Information Systems Agency Working Capital Fund are pending. The U.S. Marine Corps (USMC) two-year audit cycle will be completed in November 2023 and will not be reporting this year. The remaining Components received disclaimers of opinion.
The FY 2022 audit resulted in three new DoD-wide material weaknesses and the consolidation of six material weaknesses into three for no net change in the number of material weaknesses. The DoD Components closed three material weaknesses and downgraded one.
The Department also made important progress on the Secretary of Defense audit priority areas—Fund Balance with Treasury (FBWT), Access Controls, and Universe of Transactions. The Department maintained an overall Statement of Differences balance of $1.41bn in June 2022 (0.2 percent of DoD FBWT), down from $6.7bn in December 2018. Additionally, the Department expects auditors to close a prior year finding regarding controls for the Treasury Index-97 Cash Management Report.
The Army remediated 64 percent of its high-priority corrective actions related to access controls. The Navy deployed an Identity, Credential, and Access Management (ICAM) solution to automate account-provisioning, removal, and access reviews for over 83,000 users (11 percent of its unique user identities). Additionally, Navy remediated 27 percent of its access control and segregation of duties findings.
In this year, the USMC decommissioned three legacy systems and put in place a new general ledger system, Defense Agencies Initiative (DAI)—a significant accomplishment for any IT system migration. DAI greatly simplifies and modernizes the USMC’s already lean system environment. USMC transferred its universe of transactions to Advana to support DAI balances and reconciliations, a big step toward achieving an opinion.
The trustworthiness and transparency the audit delivers will promote a lasting, leaner, more accountable DoD resulting in:
A Modernized Workforce. Robotic process automation (RPA) efforts are reducing manual tasks, allowing financial managers to focus on more complex issues. As of October 2022, DoD has deployed 607 “bots,” with 54 percent aligning to financial management processes and 20 percent directly supporting compliance or audit response. DFAS deployed 52 “bots” for 48 new use cases and projects saving approximately 128,045 hours or an estimated $4.2m in cost savings.
Improved Business Operations. The Air Force corrected approximately $5.2bn in historical variances on its equipment and accumulated depreciation general ledger accounts. This increased level of visibility allows for greater control and oversight of military equipment financial transactions. The Air Force also automated its trial balance reconciliations, redirecting those hours to more value-added tasks.
Quality Decision Making. DLA completed a 100 percent physical inventory, establishing beginning balances and item counts for stockpile inventory. That, plus other corrective actions, has allowed DLA to sustain an inventory accuracy at 98 percent or greater, which supports decision-making at all Military Services.
Reliable Networks. In FY 2022 the Navy decommissioned three audit relevant legacy systems, migrating data and users across three Commands to modern systems. To date, Navy has decommissioned 11 audit relevant legacy systems.
Enhanced Public Confidence. Our audits demonstrated the Department takes care of its people. The Military Pay and Civilian Pay systems received unmodified Statement on Standards for Attestation Engagements No. 18 opinions for the sixth and tenth consecutive years, respectively.
Achieving our audit goals will require the continued investment of resources and focus of senior Comptroller leadership in partnership with Acquisition and Sustainment and the Chief Information Officer. While there is much work remaining, and some of our most complex problems still lay before us, the audit has been a catalyst for business reform across the Department, resulting in greater financial integrity, increased transparency, and ultimately, a better-supported warfighter.
For more information, please see the Department’s Agency Financial Report at https://comptroller.defense.gov/odcfo/afr/(Source: US DoD)
15 Nov 22. DOD Makes Audit Progress, But Much More Needs to Happen, Official Says. The Defense Department made progress toward a “clean audit,” but not as much as officials hoped.
“The results of the fifth annual DOD-wide financial audit will be a disclaimer of opinion for DOD as a whole,” Michael J. McCord, the undersecretary of defense (comptroller)/chief financial officer, said. “This is the same as last year and … not unexpected. We did expect this disclaimer, but we will also sustain all of our prior year positive opinions, which cover approximately 39 percent of our assets.”
The annual audit is a huge undertaking with independent accountants looking at a department with $3.5trn in assets.
The audit looks at every aspect of the department — an organization of about 2.9 m people with one of the federal government’s largest portfolios of real property. There are more than 643,900 assets — buildings, structures, utilities, roads and fences and more — located on over 4,860 sites worldwide as of the beginning of fiscal year 2022, officials said.
When officials say worldwide, this means assets in all 50 states, the District of Columbia, seven U.S. territories and more than 40 foreign countries. All told this encompasses nearly 25.8m acres.
And it is more than that: DOD operates one of the largest health care systems in the United States providing medical benefits to more than 9.6 m active duty personnel, military retirees and their families across the U.S and overseas.
Bases, posts and stations are the equivalent of small towns across the globe with police, hospitals, grocery stores, schools, transportation systems and housing.
All this is covered by the audit.
The results released by the DOD Inspector General today is a conglomeration of 27 different entities in the department — the services, DOD agencies and several other smaller funds and entities within the department. The IG consolidates those 27 audits.
Seven components sustained unmodified audit opinions — clean audits — on their fiscal 2022 audits, McCord said. These are: the Military Retirement Fund, the Defense Commissary Agency, the Defense Contract Audit Agency, the Defense Finance and Accounting Service, the U.S. Army Corps of Engineers — Civil Works, the National Reconnaissance Office and the Defense Health Agency — Contract Resource Management.
In addition, the Medicare-Eligible Retiree Health Care Fund received a qualified opinion. Another positive in the process is military pay and civilian pay. “Both of these processes received unmodified opinions again this year,” McCord said. “I highlight these because although we have a lot of work to do, the one thing that we have to make sure we do first is care of people.”
The military and civilian pay, the unmodified opinion on the military retirement fund and the military retiree health care fund show the emphasis is in the right place. “You have this kind of concentration of higher performance on the pay and benefits side which is important,” he said.
McCord would not give a date for when he believes the department, as a whole, will receive a clean audit, but he does believe the process will speed up given some of the changes that have been made and will be made.
One change has been the effort to modernize the workforce, McCord said. Agencies are employing robotic process automation efforts to reduce manual tasks, allowing financial managers to focus on more complex issues. DOD has deployed 607 “bots,” with 54 percent aligning to financial management processes and 20 percent directly supporting compliance or audit response, officials said. The Defense Finance and Accounting Service deployed 52 “bots” for 48 new-use cases and projects saving approximately 128,045 hours or an estimated $4.2m in cost savings.
The department is stressing improved business operations. The Air Force, for example, corrected approximately $5.2 bn in historical variances on its equipment and accumulated depreciation general ledger accounts. This increases visibility and allows for greater control and oversight of military equipment financial transactions.
Changes also mean better data for quality decision-making. The Defense Logistics Agency completed a 100 percent physical inventory, establishing beginning balances and item counts for stockpile inventory. That, plus other corrective actions, has allowed DLA to sustain an inventory accuracy at 98 percent or greater, which supports decision-making at all the military services.
The agencies are also moving to more reliable networks. In fiscal 2022 the Navy decommissioned three audit-relevant legacy systems, migrating data and users across three commands to modern systems. Overall, the Navy has decommissioned 11 legacy systems.
“I would prefer to see more progress, of course, but we are peeling off the layers,” McCord said. The easy corrections — the so-called “low-hanging fruit” — are behind the effort now. The problems confronting auditors and managers are harder “and the progress is getting harder, too,” the undersecretary said. “As we move forward, we have to continue to focus on leadership and collaboration across DOD to solve these more difficult challenges. Because we all have this role to play in support of the DOD strategic management plan.” (Source: US DoD)
14 Nov 22. US announces sanctions targeting Russian military suppliers. The U.S. said Monday it was imposing sanctions on a list of people and firms around the globe that it alleged are involved in supporting Russia’s military as it wages war on Ukraine.
Unlike recent packages of sanctions imposed on Russia-based firms and people, the latest financial and diplomatic penalties are aimed at a range of entities including French real estate companies, a group of Swiss nationals and a Taiwanese microelectronic component purchaser.
They are all accused of being financial facilitators or enablers of Russia’s military supply chain, which U.S. officials committed to disrupting after the invasion of Ukraine began in February.
“Businesses worldwide are advised to do their due diligence in order to avoid being targeted for sanctions,” Secretary of State Antony Blinken said in a statement. He said the U.S. “will continue to crack down on Russia’s attempts to evade international sanctions to fund its war machine.”
The Treasury Department’s Office of Foreign Assets Control and the State Department designated 14 people, 28 entities and eight aircraft identified as being part of a transnational network that procures technology meant to build up Russia’s military.
Additionally, family members of U.S.-sanctioned Russian elite Suleiman Kerimov were targeted for sanctions, as well as Russian businessman and investor Murat Aliev, a former executive at a Kerimov investment firm, and seven related companies.
“Together with our broad coalition of partners, we will continue to use our sanctions and export controls to weaken Russia’s military on the battlefield and cut into the revenue Putin is using to fund his brutal invasion,” Treasury Secretary Janet Yellen said in a statement.
In October, Treasury, Commerce and National Intelligence officials met with representatives from finance ministries from 33 countries to discuss the impact of international sanctions and export controls on Russia’s critical defense supply chains.
At that meeting, information from the Office of the Director of National Intelligence said Russia had lost more than 6,000 pieces of equipment since the beginning of the war and was turning to Iran and North Korea for supplies.
Russia last week retreated from the southern Ukrainian city of Kherson, which ended Russia’s eight-month occupation of the city.
The Biden administration also in October announced a round of criminal charges and sanctions related to a complicated scheme to procure military technologies from U.S. manufacturers and illegally supply them to Russia for its war in Ukraine.
Some of the equipment was recovered on battlefields in Ukraine, the Justice Department said, and other nuclear proliferation technology was intercepted in Latvia before it could be shipped to Russia. (Source: Defense News)
14 Nov 22. Logistics Agency Working Toward G-Invoicing Compliance. The Defense Logistics Agency is working to comply with the Treasury Department’s government invoicing program, known as G-Invoicing, to allow federal agencies to manage intragovernmental buy and sell transactions through a common web-based platform. Proposed benefits of the program include better communication between trading partners, increased transparency, common data standards, agreed-upon processes and the ability to send and receive funds quickly and efficiently.
“It’s breaking down the walls and stovepipes between Defense Department components and the federal civilian agencies to ensure all agencies within the federal government are processing intragovernmental transactions in a standard and consistent manner,” said Michael Lane, branch chief of DLA G-Invoicing Division’s Program and Process Support Branch.
While the Treasury Department planned for all federal agencies to implement G-Invoicing by October 1, 2022, DLA expects to fully implement it by April 2024. Until then, the agency will continue conducting business using legacy systems and processes per guidance from the Office of the Under Secretary of Defense for Acquisition and Sustainment.
Many of DLA’s trading partners, previously referred to as customers and vendors, are expected to move to the program around the same time, Lane said.
DLA ordering software like the Medical Electronic Catalog and the Fresh Fruits and Vegetables Orders and Receipt System will still be used after G-Invoicing implementation, added Max Walens, branch chief of DLA G-Invoicing’s General Terms and Conditions Center of Excellence.
Trading partners must, however, have a general terms and conditions agreement in place before placing orders through G-Invoicing processes, which will replace manual funding documents such as the Military Interdepartmental Purchase Request, or DD Form 448. Walens and his team have hosted numerous forums with trading partners to collaborate on completing agreements as well as other processes.
G-Invoicing will automate and streamline how DLA receives payment for goods and services while also resolving longstanding audit findings, eliminating material weaknesses and improving efficiency, Walens continued. But it will require significant changes. DLA’s G-Invoicing team is working with agency information technology specialists to create software solutions that enable DLA business systems to process intragovernmental data and allow DLA financial information to flow seamlessly to the G-Invoicing system.
“For DLA to manually input data into the Treasury system, we’d be talking about hundreds and thousands of staffing hours and risk potential double payments,” he said.
DLA will have the largest amount of money of any DOD activity, possibly the federal government, going through the intragovernmental payment and collection system, Lane said. More information is available at the DLA G-Invoicing website. (Source: US DoD)
11 Nov 22. Aerospace Industries Association Releases 2022 Facts & Figures Data Highlighting the Aerospace & Defense Industry’s Economic Impact. The Aerospace Industries Association (AIA) in collaboration with IHS Markit has released “Facts & Figures,” a look into the state of the A&D industry as it continues to navigate economic, legislative, and regulatory challenges while investing in its workforce, generating economic growth, advancing innovation, and enabling national security. Informed by 2021 data, “Facts and Figures” is a snapshot of the A&D industry’s workforce, wages, sales, and trade numbers. The 2021 A&D workforce stood at more than 2.1 m strong, with employees in every state in the U.S. These are highly skilled, good-paying jobs, with an average salary of over $106,700, about 40 percent above the national average. Jobs supported by the A&D industry represent approximately 1.4 percent of the nation’s total employment base. Although still in recovery, the A&D workforce increased by approximately 6,000 employees. More than 57 percent of employment comes from the shared A&D supply chain, an extensive network of suppliers composed of thousands of small and medium-sized businesses. Despite the inflationary pressure and continued pandemic recovery, the industry’s workforce generated $892 bn in combined sales in 2021, a 2.1 percent increase from the prior year. That is promising news for America, as every m dollars in end-use sales supports more than four employees across end-use manufacturing and the supply chain. (Source: glstrade.com)
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