Mr. Chairman, thank you for calling this hearing on the Department of Defense's (DoD) shortcomings in its financial management systems. This is a subject of vital importance to the Department and to this Committee, because without timely, accurate financial information, our senior military and civilian leaders will continue to be severely handicapped in making day-to-day management decisions and ensuring that taxpayer dollars are well spent.

Over the first four years of this Administration, senior DoD officials promised us that they were making a serious effort to address the problem. Unfortunately, as we learned at last year's hearing, despite spending some $200 million on the project to transform the Department's business operations, the Department failed to take even the most basic steps to rectify this problem. I remain deeply distressed that the Department appears to have wasted the better part of four years on a dead-end path that will yield no positive results for the Department or the taxpayer. I would like to note that I am also the ranking member of the Oversight of Government Management Subcommittee, where that Subcommittee's chairman, Senator Voinovich and I have been holding investigative hearings on DoD programs on the Government Accountability Office's (GAO) high-risk list, including business modernization.

Since the time of last year's hearing, Secretary Gordon England has brought new focus to Defense management issues in his new role as Deputy Secretary of Defense, and has brought in a team to work on fixing the Department's business systems. This team -- under the leadership of Paul Brinkley and Tom Modley -- has been a breath of fresh air. Instead of spending millions of dollars on consultants as did their predecessors, Mr. Brinkley and Mr. Modley have started to break down the problem into manageable steps and work their way through them.

The business enterprise architecture and transition plan that we received from Mr. Brinkley and Mr. Modley on September 30 is just a first step. The GAO indicates that the architecture and transition plan is still far from complete -- it only partially addresses the key requirements spelled out in our legislation. Months of work still lie ahead for the Department to develop a more mature architecture and transition plan that will provide the necessary detail to address its financial problems. And once that architecture and transition plan is in place, it will take years to implement.

Nonetheless, this document is a step in the right direction. At least now, we appear to have a sound foundation upon which we can start building.

I believe that the most important step Congress can take now is to institutionalize a process that finally seems to be going in the right direction. Too many times we have seen a new Administration come in and scrap the work of its predecessor, condemning DoD to start from scratch. We all like Secretary England and believe he will do his best to improve the management of the Department. We are pleased by what we have seen from Mr. Brinkley and Mr. Modley.

But these are individuals, not institutions. To be successful, we need to develop structures that will remain in place from one Administration to the next. That is why I believe we have done the right thing in codifying the Defense Systems Business Management Committee. In addition, I believe we should do what we can to institutionalize the new Business Transformation Agency established by the Department last month, and support the Comptroller General's recommendation to establish a new Deputy Secretary for Management at the Department of Defense. In this effort, the Senate yesterday agreed to an amendment offered by Senators Byrd, myself, Senator Ensign, the Chairman of this Subcommittee, and Senator Lautenberg, calling for two Federally Funded Research and Development Centers to conduct independent studies of the feasibility and advisability of establishing a Deputy Secretary of Defense for Management whose responsibility would be to serve as the Chief Management Officer of the Department of Defense. There are some who are uncertain as to the necessity of this position, and these studies will examine the impact that creating such a position would have on the management of the Department. I am pleased that the Senate has agreed to further review this matter, and I look forward to the testimony of today's witnesses.