UNDER SECRETARY OF DEFENSE

1 100 DEFENSE PENTAGON
WASHINGTON, DC 20301-1100

COMPTROLLER

The Honorable Darrell E. Issa Chainnan Committee on Oversight and Government Refonn U.S. House of Representatives Washington, DC 20515-6143 Dear Representative Issa:

MAR 2 8 20ll

Thank you for your interest in Department of Defense (DoD) financial management modernization efforts. This country is fortunate to be served by dedicated service men and women, and DoD owes it to them and to the American taxpayers to be sure that the Department is fiscally responsible. Within efforts to modernize electronic systems, the Department of Defense has developed an Enterprise Transition Plan and a Federal Spending Data Quality Plan that focus on business system modernization and the quality of data provided to the public. Responses to your requests are provided in the enclosure to this letter. Similar letters with the enclosed responses have been sent to your colleagues who joined you in writing this request. Again, thank you for your interest in this matter and for the support you provide to the men and women of the Department of Defense. Sincerely,

Robert F. Hale Enclosure: As stated cc: The Honorable Elijah Cumlnings Ranking Member

UNDER SECRETARY OF DEFENSE
WASHINGTON, DC

1 100 DEFENSE PENTAGON 20301-1 100

COMPTROLLER

The Honorable Darrell E. Issa Chainnan COllli11ittee on Oversight and Govermnent Refonn U.S. House of Representatives Washington, DC 20515-6143 Dear Representative Issa:

MAH 2 8 201'1

Thank you for your interest in Departlnent of Defense (DoD) financiallnanagement lnoden1ization efforts. This country is fortunate to be served by dedicated service lnen and women, and DoD owes it to theln and to the Alnerican taxpayers to be sure that the Departlnent is fiscally responsible. Within efforts to lnoden1ize electronic systelns, the Departlnent of Defense has developed an Enterprise Transition Plan and a Federal Spending Data Quality Plan that focus on business systeln lnoden1ization and the quality of data provided to the public. Responses to your requests are provided in the enclosure to this letter. Similar letters with the enclosed responses have been sent to your colleagues who joined you in writing this request. Again, thank you for your interest in this lnatter and for the support you provide to the lnen and WOlnen of the Departlnent of Defense. Sincerely,

Robert F. Hale Enclosure: As stated cc: The Honorable Elij ah CUlnlnings Ranking Melnber

Committee on Oversight and Government Reform March 8, 2011 Requests and Responses
1. Identify and briefly describe each of your agency's business and accounting systelns. If separate divisions, bureaus, or offices of your agency use separate systems, identify which divisions, bureaus, or offices use each systenl.

Response: The Department of Defense (DoD) Fiscal Year (FY) 2011 Enterprise Transition Plan (ETP) Master List of Systems includes all DoD business and accounting systems for each of the DoD Components. The DoD ETP also includes System Dashboards, which contain a brief description, as well as cost, schedule, and performance information for each of the Departlnent's recent, current, and currently planned system modernizations. Both the Master List of Systems and Systeln Dashboards can be accessed from the DoD ETP website, hosted by the DoD Office of the Deputy Chief Management Officer (ODCMO) (http://dcmo.defense.gov/etp/FY20111home.htnll). 2. Explain how the business and accounting systelns identified in response to Request No.1 interact with one another. Response: The DoD business and accounting systems interact with one another to submit information to government-wide accounting systems. Each of the DoD Component systems identified in the response to Request No.1 work together within business processes to execute business functions and produce various budget exhibits and financial reports to include The President's Budget request for the DoD, the Agency's Financial Report, and various other financial reports. These reports include data from various systems that perform budget formulation, distribute and manage the budget, execute requisitions, source goods and services, manage contracts, execute purchases, perform receipt and acceptance, process invoices, execute disbursements, and accumulate and report business information. 3. For each system identified in response to Request No.1, state whether the information found, in that system is regularly or periodically submitted to any of the government-wide accounting systems maintained by the Department of the Treasury, e.g., Government Financial Reporting System (GFRS), Federal Agencies' Centralized Trial-Balance System (FACTS) I, FACTS II, Intragovernmental Fiduciary Confirmation System (IFCS), etc., and explain how and at what intervals those submissions occur, including descriptions of both manual and automated processes. Response: The DoD uses only one systeln, the Defense Departmental Reporting Systenl (DDRS), to periodically submit information to govenunent-wide accounting systenls Inaintained by the Department of the Treasury. The infonnation is reported from DDRS to GFRS and FACTS I annually, and FACTS II, IFCS, and Intragovernmental Reconciliation and Analysis Systeln (IRAS) qumierly. An automated process is used to

Enclosure

report data to FACTS I, FACTS II, and lRAS. Data is entered manually from DDRS balances directly into GFRS and IFCS. 4. For each systeln identified in responses to Request No.1, state whether infonnation found in that system is regularly or periodically submitted to the Office of Management and Budgee s (OMB) MAX Information System, and explain how and at what intervals those submissions occur, including descriptions of both automated and manual processes. Response: The DoD uses DDRS and the Comptroller Information Systeln (CIS) to submit information to the OMB MAX Information System. Specifically, OMB MAX is provided information from FACTS II which includes a quarterly automated process from DDRS. The CIS also populates OMB MAX twice per year - mid-season and year-end with the prior year, current year, and budget year data. 5. For each system identified in response to Request No.1, describe recent, current and planned migration or modernization projects. Response: The DoD ETP Master List of Systems and System Dashboards available on the DoD ODCMO website (http://dcmo.defense.gov/etp/FY20111holne.html) provide the recent, current, and planned migration and modernizations projects for the Department. 6. In addition to your agency's submissions to government-wide accounting systems maintained by the Department of the Treasury and OMB, as described in response to Requests Nos. 3 and 4, does your agency publish any of the same information online for public viewing? If so, describe how and in what format that information is published. Response: The DoD publishes various budget and financial reports for public viewing on the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) website (http://comptroller.defense.gov/). 7. Identify and briefly describe each system that your agency uses to manage grants, direct loans, and/or loan guarantees. If separate divisions, bureaus, or offices of your agency use separate systems, identify which divisions, bureaus, or offices use each system. Response: The DoD FY 2011 ETP includes all DoD systems to award grants, cooperative agreements, and other types of assistance actions. The DoD ETP, available on the DoD ODCMO website (http://dcmo.defense.gov/etp/FY2011/home.html), identifies all business and accounting systems in the Master List of Systelns for each of the DoD Conlponents and briefly describes modernization projects within the System Dashboards. 8. For each system identified in response to Request No.7, explain how it interacts with any business or accounting systeln identified in response to Request No.1.

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Response: DoD Components rely on a few different systems but use the same core process in the award of grants, cooperative agreements, and similar assistance transactions. Prior to making an award, a comlnitment for the funds is recorded in the accounting system. After the award is made, the resulting obligation of the funds is communicated to both the appropriate accounting system, for recording of the obligation, and entitlement system, to authorize subsequent disbursements. In lnost cases, the information is shared between systelns using electronic interfaces, although there are Component organizations that do some manual entry. Many of the improvements and modernizations discussed in the answer to Request No.5 are to implement more streamlined and standardized processes related to these processes. 9. For each system identified in response to Request No.7, state whether information found in that system is regularly or periodically submitted to the Catalogue of Federal Domestic Assistance (CFDA), and describe how and at what intervals those submissions occur, including descriptions of both automated and manual processes. Response: DoD Components submit new or updated information lnanually for the CFDA through General Services Administration's website for agency submissions. After the information has been entered and is ready for submission, the Defense Manpower Data Center (DMDC), as the DoD central liaison with the CFDA, releases it to GSA for their review to obtain clearance to publish. 10. For each system identified in response to Request No.7, state whether information found in that system is regularly or periodically submitted to any of the government-wide grants management and reporting systems, e.g., FAADS, FAADS Plus, etc., and describe how and at what intervals those submissions occur, including descriptions of both automated and manual processes. Response: DoD Components submit data on their obligations by grant, cooperative agreement, or similar assistance transaction to the Defense Assistance Awards Data System (DAADS), which the Defense Manpower Data Center (DMDC) operates and maintains. Some Components provide data in batch files generated using award management systems identified in the ETP (e. g., CONWRITE in the Air Force and NAVRIS at the Office of Naval Research). Others submit the data manually through a web based DAADS input portal. The DMDC manually submits data from DAADS in the FAADS Plus format to the USASpending.gov website. The DMDC submits data twice per month. Each DMDC submission includes all data received up to the day before the data are submitted. Prior to the recent guidance from OMB stating that separate repoliing to FAADS no longer is required, DMDC also submitted award data to FAADS. 11. For each system identified in response to Request No.7, describe recent, current and planned migration or modernization projects.

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Response: The DoD ETP Master List of Systems and System Dashboards available on the DoD ETP website (http://dcmo.defense.gov/etp/FY20111home.html) provide the recent, current, and planned migration and modernizations proj ects for the Department. 12. In addition to your agency's submissions to government-wide grants management and reporting systems, described in response to Requests Nos. 9 and 10, does your agency publish any of the same information online for public viewing? If so, describe how and in what format that infonnation is published. Response: The information submitted to the Catalogue of Federal Domestic Assistance (CFDA) by DoD is also available at the GSA maintained CFDA website (https:llwww.cfda.gov) for the public to view. There is currently no central DoD location at which grants information is posted for public viewing. 13. Identify and briefly describe each system that your agency uses to manage contracts. If separate divisions, bureaus, or offices of your agency use separate systems, identify which divisions, bureaus, or offices use each system. Response: The DoD FY 2011 ETP includes all DoD systems to award contract actions. The DoD ETP, available on the DoD ODCMO website (http://dcmo.defense.gov/etp/ FY2011/home.html), identifies all business and accounting systelns'in the Master List of Systems for each of the DoD Components and briefly describes modernization projects within the System Dashb9ards. . 14. For each system identified in'response to Request No. 13, explain how it interacts with any business or accounting system identified in response to Request No.1. Response: DoD Components rely on a few different systems but use the same core process to award contract actions. Prior to making an award, a commitment for the funds is recorded in the accounting system. After the award is made, the resulting obligation of the funds is communicated to both the appropriate accounting system, for recording of the obligation, and entitlement system, to authorize subsequent disbursements. In most cases, the information is shared between systems using electronic interfaces, although there are Component organizations that do some Inanual entry. Many of the improvements and modernizations discussed in the response to Request No.5 are to implement more streamlined and standardized processes related to these processes. 15. For each systeln identified in response to Request No. 13, state whether information found in that system is regularly or periodically submitted to any of the government-wide grants management and reporting systems, e.g., FPDS, FPDS-NG, FAPIIS, etc., and describe how and at what intervals those subnlissions occur, including descriptions of both automated and manual processes.

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Response: On a daily basis, contracting officers report their contract actions from their contract writing systems to the Federal Procurement Data System (FPDS) in accordance with the requirements of the Federal Acquisition Regulation (FAR) subpart 4.6. In ahnost all cases in the Depmiment, this includes a direct interface between the user's contract writing system and FPDS to assist in completing the report. FPDS then makes the contract information reported to it available daily for the USASpending.gov website to retrieve and display. This constitutes the process by which the Department complies with its requirement to provide data regarding prime contract awards to USASpending.gov in suppOli of the Federal Funding Accountability and Transparency Act (FFATA). Additionally, regarding the Federal Awardee Performance and Integrity Information System (F APIIS), contracting officers also repoli required terminations for default, terminations for cause, determinations of defective cost and pricing data, and nonresponsibility determinations to FAPIIS in accordance with the requirements of FAR subparts 9.105-2 and 42.1503(f). This information, along with other data collected in FAPIIS, is then used to inform future contracting officer responsibility determinations made prior to contract awards. 16. For each system identified in response to Request No. 13, describe recent, current and planned migration or modernization projects. Response: The DoD ETP Master List of Systems and System Dashboards available on the DoD ETP website (http://dcmo.defense.gov/etp/FY20111home.html) provide the recent, current, and planned migration and modernizations projects for the Department. 17. In addition to your agency's submissions to government-wide grants management and reporting systems, described in response to Requests Nos. 9 and 10, does your agency publish any of the same information online for public viewing? If so, describe how and in what format that information is published. Response: The contract action reports submitted to FPDS by DoD are available also at the FPDS website (https://www.fpds.gov) for the public to view individually or as a part of other pre-defined reports. Additionally, the Department's contracting officers post required notices of award of contracts on the Federal Business Opportunities (FedBizOpps) website (http://www.fuo.gov) in accordance with FAR subpart 5.3. There is no other central location in the Department where all DoD contract actions are posted on a public website. Individual contracting offices may have their own local websites where they publish information about their own local contract awards. 18. Briefly describe your agency's efforts to comply with OMB's Inemorandum on the Open Goverrunent Directive - Federal Spending Transparency, dated April 6, 2010. In particular, describe whether and how your agency has begun to collect and report sub-award data, as required by the memorandum, and describe how your agency's report sub-award data, as required by the melnoranduln, are generated.

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Response: The sub awards reporting requirelnent provides the Department and the rest of the Federal Government with an additional opportunity to make available information to USASpending.gov. As with the above contracts solutions, DoD is joining with other Federal agencies in leveraging existing reporting systems to meet the requirements of the USASpending.gov website. For subawards, including both subcontracts and subawards under grants, a new module (FF A TA Subaward Reporting System (FSRS)) of the Electronic Subcontract Reporting Systeln (ESRS) was developed to allow prime contractors and assistance award recipients to report their subawards they award in accordance with FFA TA. It leverages data on prime awards that DoD submits to USASpending.gov through FPDS and FAADS Plus files. This effort also leverages the Central Contractor Registration (CCR) database to use the data that prime contractors and assistance awardees already provide regarding the compensation of their top executives. Both FAR and Title 2 of the Code of Federal Regulations have been updated to require prime contractors and assistance awardees to report their subawards to FSRS, which in turn are then displayed in USASpending.gov. This reporting began for prime contractors in July 2010 for new prime contracts valued over $20 million. On October 1,2010, the reporting requirements expanded to prime contractors with new contracts valued over $550,000 and prime assistance awardees with awards valued at $25,000 or more. On March 1, 2011, the dollar thresholds for prime contractors to report was lowered to $25,000. As a result, the reporting requirement applies to all prime contract and assistance awards valued at $25,000 or more. As of March 18, 2011, DoD prime awardees have reported over $500 million in subaward obligations in FY 2011. 19. If your agency interacts directly with USASpending.gov, in addition to submitting information to the systems that feed USASpending.gov, describe the nature, frequency, and purposes of that interaction. Response: The Department has a relatively small amount of funds awarded through loans. To report this data to USASpending.gov, the Department's OUSD(C) provides the required information periodically through a new report. 20. Describe the data quality controls and procedures that your agency has implemented for information that is submitted to USASpending.gov, including information submitted directly and information submitted to one of the systems that feed USASpending.gov. Response: The Department's data quality controls and procedures over information submitted to USASpending.gov is contained in the Department of Defense Federal Spending Data Quality Plan that was signed out on May 14, 2010, and is currently available through the Open Government website at http://open.docllive.lnil/ files/201 0/06 /DOD-Open-Governlnent-Data-Qualit:y-Plan.pdf. 21. State whether all of your agency's current grants, contracts, and loans are accurately reflected on USASpending.gov, and, if not, estinlate the percentage of current grants, contracts, and

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loans that are not accurately reflected, using both the number of transactions and dollar figures. Response: On January 11, 2011, the Director of Defense Procurelnent and Acquisition Policy certified to the Office of Federal Procurement policy that twenty-two of the twenty-three DoD components with procurement authority which report actions to FPDS (excludes Intelligence Agencies and other classified contracts) had provided certifications that they had completed all required contract reporting actions to FPDS for FYI awards, as well as completed required verification and validation reviews. These certifications cover over 990/0 of reported DoD actions and over 97% of reported DoD obligations. The Department is confident that the data reported to FPDS is displayed accurately on the FPDS website, as well as provided to USASpending accurately. Although there is not a similar certification requirement to OMB for grants and loans, DoD is actively working with OMB and civilian agencies on data quality for grants and loans that are submitted to USASpending.gov. The Department can not certify to the accuracy of how the reported data is presented on USASpending.gov, as USASpending.gov changes the data reported for display and public search purposes based on initial website requirements identified by OMB.

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22. State whether your agency incurs any reporting burdens or costs as a result of its obligations under the Federal Financial Assistance Transparency Act ("FF ATA") that it does not incur as the result of other reporting obligations, and estiInate those burdens and costs in workerhours and dollars. Response: The Department has incurred a burden of over 78,000 man-hours to comply with the requirements for FFATA prime award reporting. 23. Identify the individual(s) who serve(s) as Senior Accountable Official(s) ("SAO") over federal spending data quality for your agency, as defined by OMB. Response: The SAO over federal spending data quality for the DoD is Mr. Mike McCord, Principal Deputy Under Secretary of Defense (Comptroller).

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