Sponsors (23)
The bill trades stronger oversight, clearer incentives, and some fiscal savings to improve DoD financial accountability for risks of program cuts, potential hits to readiness, added administrative costs, and reduced transparency that could complicate or slow remediation efforts.
Taxpayers and DoD stakeholders gain stronger oversight and clearer financial incentives: the bill highlights persistent audit failures, requires use of cleared auditors for classified programs, and creates mechanisms (reporting + consequences) to push DoD entities toward clean audited financial statements.
Active-duty service members retain explicit support for wounded warrior programs and continued access to protective gear (e.g., body armor), helping reduce risk of injury or death for injured and frontline personnel.
Taxpayers benefit from a direct fiscal mechanism: identified DoD accounting failures can trigger up to 1% budget reductions whose recovered funds are deposited to the Treasury General Fund for deficit reduction.
DoD program funding and services could be cut or delayed: across-the-board or entity-level reductions (up to 1%) risk degrading programs, projects, and activities that benefit service members and civilians.
National security readiness and acquisitions could be impaired if reductions are applied to non-exempt defense activities, creating operational risk for the military.
Redirecting recovered funds to deficit reduction reduces DoD's ability to reinvest in corrective financial-management actions, potentially making it harder to fix the underlying accounting problems and imposing indirect costs on civilians and employees.
Based on analysis of 4 sections of legislative text.
Requires automatic pro rata funding cuts to DoD entities that fail to get a clean financial audit opinion, deposits the cuts into the Treasury for deficit reduction, with exemptions and presidential waiver.
Introduced February 12, 2026 by Mark Pocan · Last progress February 12, 2026
Requires DoD departments, agencies, and elements to obtain an unqualified (clean) audit opinion on their full financial statements; if an entity does not receive a clean opinion for a fiscal year after FY2025, its available budget authority will be reduced (0.5% the year of determination and 1.0% in any later year with the same finding), with reductions applied pro rata across programs and deposited into the Treasury’s General Fund for deficit reduction. Military personnel accounts and the Defense Health Program are exempt, the President may waive reductions for national security reasons, and OMB must report details of any reductions to Congress. Also records findings that DoD has repeatedly failed audits and expresses nonbinding congressional views that certain wounded warrior and protective accounts should not be cut, that legacy-asset valuation should be simplified only if internal controls and audit standards are preserved, and that classified program accounting must remain secure while still achieving financial accountability (including use of cleared auditors).