Department of Defense spending reductions in the absence of an unqualified audit opinion

(a) In general (1) Reductions If, during any fiscal year after fiscal year 2025, the Comptroller of the Department of Defense fails to certify to Congress that a department, agency, or other element of the Department of Defense has achieved an unqualified opinion on its full financial statements, the amount available for such department, agency, or element shall be reduced— (A) for the fiscal year during which such determination is made, by an amount equal to 0.5 percent; and (B) for any subsequent fiscal year during which such determination is made, by an amount equal to 1.0 percent. (2) Application of reductions For any fiscal year for which a reduction is made pursuant to paragraph (1) for a department, agency, or element, the amount of the reduction shall be applied on a pro rata basis against each program, project, and activity of such department, agency, or element for that fiscal year. (3) Use of reduced amounts The amount of any reduction made under paragraph (1) shall be deposited in the General Fund of the Treasury and shall be available for purposes of deficit reduction. (b) Accounts excluded The following accounts are excluded from any reductions under subsection (a): (1) Military personnel, reserve personnel, and National Guard personnel accounts of the Department of Defense. (2) The Defense Health Program account of the Department of Defense. (c) Waiver The President may waive subsection (a) with respect to an account if the President— (1) certifies that the application of such subsection to that account would— (A) negatively affect the national security of the United States or members of the Armed Forces who are deployed in combat zones; or (B) affect the Defense Health Program account; and (2) submits to the Committee on Appropriations and the Committee on the Budget of the House of Representatives and the Committee on Appropriations and the Committee on the Budget of the Senate a report on such waiver that includes a description of the specific activities that would be affected and why such activities are essential to the national security of the United States. (d) Report Not later than 60 days after a reduction takes effect under subsection (a), the Director of the Office of Management and Budget shall submit to Congress a report specifying each department, agency, or other element of the Department of Defense subject to reduction and the amount of the reduction. (e) Definitions In this section: (1) The terms financial statement and external independent auditor have the meanings given those terms in section 3521(e) of title 31, United States Code. (2) The term unqualified, with respect to the audit status of a financial statement, includes the characterizations clean and unmodified.