mr. mccord: thank you, mr. chairman. we have a lot of hard work to do on audit, and we're making good progress. you probably heard both of those thoughts yesterday. an audit is a team effort and works with the military department to work with service providers. the second way is it requires the collaboration of people throughout the department, people who do audit as a primary function, is a primary responsibility, but requires decisions of the personnel community, people who do not think audit is not my primary job to work, and we cannot make it work the because it requires information from those systems. it is much like if the secretary were to turn to general dempsey and ask him to accomplish a task and some up a task for some it would require people in a different sphere, all the things that support. very much the same with our audit task. it requires financial managers that i am in charge of, but the statistician and that community that own the information across the department. with respect to the issue yesterday,

mr. michael mccord the comptroller of the department who is available with us to answer questions, and mr. mccord i might just warn you that audit came up several times yesterday with the service chiefs, and if somebody else doesn't ask about it, i'm going to at the end, because there is concern that some of the defense white agencies are going to be the holdup, rather than the services. and we'll get into that as appropriate. mr. secretary, i very much appreciate your willingness to work with us and the senate on various reform issues. i think you make excellent points about the need to find greater efficiency in the department. but -- and again, thinking back to what you wrote 15 years ago, as the chairman just said our security environment is incredibly more complicated than we could have imagined in the year 2000 when you wrote those words. and so it seems to me that even more than efficiency, some sort of reform, and especially reform in how we acquire goods and services, is needed to make the department more agile. because there's no way we're going to predict what's happening, and

mr. mccord: thank you, mr. chairman. we have a lot of hard work to do on audit, and we're making good progress. you probably heard both of those thoughts yesterday. issue become -- an audit is a team sport had intercourse the military department to work with service providers. the second way is it requires the collaboration of people throughout the department, people who do audit as a primary fraction is a primary responsibility, but requires decisions of the personal community, people who do not think audit is not my primary job to work, and we cannot make it work the cause it requires information from those systems. it is much like if the secretary were to turn to general dempsey and ask him to a company a task and some up a task for some it would require people in a different sphere, all the things that support. very much the same with our audit task. it requires financial managers that i am in charge of, but the statistician and that community that own the information across the department. for the spec to the issue

mr. michael mccord the comptroller of the department who is available with us to answer questions and mr. mccord i might just warn you that audit came up several times yesterday with the service chiefs and if somebody else doesn't ask about it, i'm going to at the end, because there is concern that some of the defense white agencies are going to be the holdup, rather than the services. and we'll get into that as appropriate. mr. secretary i very much appreciate your willingness to work with us and the senate on various reform issues. i think you make excellent points about the need to find greater efficiency in the department. but -- and again, thinking back to what you wrote 15 years ago as the chairman just said our security environment is incredibly more complicated than we could have imagined in the year 2000 when you wrote those words. and so it seems to me that even more than efficiency some sort of reform, and especially reform in how we acquire goods and services, is needed to make the department more agile. because there's no way we're going to predict what's happening, and if we

mr. mccord let me ask you one other thing. you heard some of the discussion about what we can use oco for and what we can't. my understanding is there is omb guidance and perhaps some department guidance that helps direct the uses for oco funds versus base funds. my understanding and my memory is that congress can also designate oco funds for procurement and we bought f-35s in the past with oco funds. am i on the right track here? >> yes mr. chairman. there is an agreement between the office of management and budget and the department of defense. i was involved in negotiating that early on in this administration. we felt that it needed to be a little tighter than it had been when we got here. and we -- that agreement dates to 2010 and it has got geographic aspects to it things that happened in this country things that happened in country in the agreement may not be and we had some modifications to that. you're also correct in that congress plays a role in general. oco funding has to be designated by both the congress and the p

mr. mccord, i might just warn you that an audit came up several times yesterday, and if someone else does not ask you about it i'm going to at the end because there is can turn -- concerned at the defense agencies will have a hold up, and we will get into that as appropriate. mr. secretary, i very much appreciate your willingness to work with us and the senate on various reform issues, i think you make excellent points about the need to find greater efficiency within the department, and again, thinking back to what you wrote 15 years ago, as a chairman just said, our security environment is incredibly more complicated than we could have imagined in the year 2000 when you wrote those words, so it seems to me that even more than efficiency, some sort of reform, and the session -- especially reform that is needed to make the department more agile, means there is no way there is no way we can predict what is going to happen. if we need to make 20 years -- take 20 years to make a new system, the need for agility is even a higher priority in my mind that the need for efficiency. do you have any

mr. mccord, how in the world can we for nine more years continue to spend billions and billions of dollars in a country that we have very little accountability for? and we had general campbell here last week, and i'm very impressed with him and i want to make that clear, but the point is, we will continue to put money down the rathole, and then they will say it is time to put money down this rathole. i would say this under the secretary of defense under george bush or who the next secretary of defense might be, why can't people like yourself sir, be honest with the american people who pay our salary, who pay for the military, and say "you know what? we need to rethink where we are. we need to have a benchmark. if we have not reduce the waste of money, that we need to change our policy and start pulling out." i want to ask you sir, are you going to bring in these other people to tell you about the absolutely waste of money in afghanistan that is taken away from us rebuilding our military? comptroller mccord: thank you for that, congressman, you had a very straightforward question, and i wil

mr. mccord. i appreciate your willingness to talk about the president's fy-2016 which the chairman has noted is $38 billion above the budget control act discretionary funding caps but also as the chairman noted these bca caps, coupled with imminent threat of sequestration level cuts and lack of budget stability necessary for military planning create a urgent and growing strategic problem we simply must address. indeed my view create as problem for every federal agency and department and sequestration across the board must be ended. on january 28th this committee heard stark testimony from each of the service chiefs about the impact of reduced funding levels. all of the services are working hard to maintain near term readiness to maintain the fight tonight requirement but increased cuts delays, increased modernization and retaining quality of life programs. as air force chief of staff general welch eloquently stated when the bugle calls we will win but the vulnerabilities sequestration introduces

mr. mccord. i appreciate your willingness to be here to talk about the president budget request. it is $38 billion above the funding caps. also, as the chairman noted, these caps coupled with the imminent threat of sequestration level cuts and the lack of the budgetability necessary for military planning create an urgent and growing strategic problem that we simply must address. in my view, it creates a problem for every federal agency and department. i think sequestration across the board must be ended. on january 28, this committee heard testimony from each of the service chiefs. all of the services are working hard to maintain near-term readiness to meet the fights tonight requirement but also by assuming increased risks in terms of maintenance modernization and infrastructure sustainment. as air force chief of staff general welsh stated, when the bill calls, we will win. sequestration will encourage our adversaries, worry our allies, limit the operations we can conduct and increase risk for the men and women who fight america's next war. the services are the backbone of our n

mccord, do you want to add anything? >> not on this subject of afghanistan. thank you. >> thank you. senator reid. >> thank you mr.chairman. thank you, gentlemen, for your testimony, for your service. just to quickly following up, mr. secretary you have been through afghanistan, iraq and the region and also been in communication with foreign leaders, your counterparts across the globe. are they aware of the impending budgetary train wreck in the united states? and does this sort of create an anxiety and conclusion that we won't have the resources even if we have the resolve? >> well, in general they're polite enough not to raise this question. but when i have had conversations with foreign leaders, i think it is distressing to me because they hear everything we say. and they see everything we do. and they get a very clear picture of the dangers of sequester. they probably get an outsized picture of our lack of will but this isn't good for our friends. of course, i'm only talking to our friends, so i can only imagine what our foes are thinking but they're probably thinking the same thing. what are these guys doing