Military Housing:

Opportunities Exist to Better Explain Family Housing O&M Budget Requests and Increase Visibility Over Reprogramming of Funds

GAO-04-583: Published: May 27, 2004. Publicly Released: May 27, 2004.

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The military services have owned and operated much housing on their installations but increasingly are privatizing housing, relying on the private sector to manage the renovation, construction, and maintenance of existing and new homes for military families. Funding to operate and maintain existing government-owned housing is provided through the family housing operation and maintenance (O&M) appropriations. The amount of funding required varies based on a number of factors, including how quickly privatization occurs to reduce requirements for government-owned housing. As requested, this report discusses the (1) services' assumptions and methods used to develop budget requests and how well their budget justifications explain the impact of privatization on family housing O&M funds and (2) the extent to which Congress has visibility over the services' reprogramming of family housing O&M funds.

Budget justification materials submitted to Congress for family housing O&M funding do not clearly and consistently explain funding requirements and how the housing privatization program impacts the services' budget requests, frustrating congressional oversight. Various factors have contributed to this situation. The services use similar assumptions and methods to develop budget requests for family housing O&M, but they often rely on assumptions established up to a year and a half before the budgets are executed. While the services have the ability to revise and update their budget requests, they typically choose not to because of the difficulty of doing so related in part to other competing defense priorities and the relatively small size of the family housing O&M budget. Given these considerations, defense officials said that they are more likely to make the needed funding adjustments through reprogrammings. In addition, changes in the pace of expected privatization can affect funding required for the nine family housing O&M accounts and subaccounts--although not uniformly--but the effects of these changes are not well explained in budget justifications submissions to Congress. Although, in many cases, the services may have data that could result in better informed decision making, they do not always include such information in budget justifications. Congress has limited visibility of the services' reprogramming of family housing O&M funds. For example, Congress is not notified when reprogrammings are below 10 percent of the initial funding amount or result in a decrease. On the other hand, DOD provides congressional decision makers with more information on reprogrammings for other appropriations, such as regular O&M. In addition, compared with the other services, the Navy and the Marine Corps' reporting of reprogrammings provides even less visibility. For example, they did not report to Congress reprogrammings for the four subaccounts--management, services, furnishings, and miscellaneous--within the operations account. In addition, the Defense Finance and Accounting Service's obligation reports for the Navy and Marine Corps do not separate the four operations subaccounts, as they do for the other services. Navy and Marine Corps officials were not aware of the usefulness to separate the four operations subaccounts. Also, the Navy and the Marine Corps obligation data reflecting reprogramming actions do not always match comparable official obligation data produced by the Defense Finance and Accounting Service. Even though the two services have been working with the Defense Finance and Accounting Service, officials told GAO that this has been a long-standing issue and difficult to resolve. Collectively, this lack of visibility over the reprogramming of funds and data inconsistencies hinder the ability of congressional and DOD decision makers to evaluate family housing O&M budget requests and obligations.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In the Congressional language accompanying the 2005 Military Construction Bill, Congress specifically cited GAO's report as evidence that the shifting of funds is significant and directed each of the military services to report further information on reprogramming of funds within family housing O&M accounts.

    Matter: To improve visibility over reprogrammings of family housing O&M funds by all services, Congress may wish to consider requiring the Secretary of Defense to provide it information covering the movement of funds for the family housing O&M appropriations in a report at the end of the fiscal year, similar to what DOD now provides to Congress on other DOD appropriations. This report should provide timely and accurate information on movement of funds, which includes reprogrammings within the nine family housing O&M accounts and subaccounts, along with other information on other fund movements such as transfers and supplementals.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On July 27, 2004, DOD provided written direction to the Secretary of the Navy and the Defense Finance and Accounting Service to implement procedures to report obligation data using the same budget structure that congressional conferees use to designate how funds are to be used for the four operations subaccounts, similar to reporting done by the other military services.

    Recommendation: To improve visibility over the Navy and the Marine Corps' reprogrammings of family housing O&M funds, the Secretary of Defense should direct the Secretary of the Navy to work with the Defense Finance and Accounting Service to report obligation data using the same budget structure that congressional conferees use to designate how funds are to be used for the four operations subaccounts, similar to reporting done by the other military services.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In June 2004, DOD updated its Financial Management Regulation to require the military services to provide an explanation of the effect of the housing privatization on their budget estimates for the military family housing O&M accounts and subaccounts.

    Recommendation: To provide Congress with sufficient data in the services' budget justification submissions, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to work with the services to better explain the impacts of the housing privatization initiative on the budget requests for each of the nine family housing O&M accounts and subaccounts.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: On July 27, 2004, DOD provided written direction to the Secretary of the Navy and the Defense Finance and Accounting Service to implement procedures to resolve long-standing data inconsistencies to ensure that obligation data reported by the Defense Finance and Accounting Service match obligation data reported by the Navy and the Marine Corps.

    Recommendation: To improve visibility over the Navy and the Marine Corps' reprogrammings of family housing O&M funds, the Secretary of Defense should direct the Secretary of the Navy to work with the Defense Finance and Accounting Service to resolve long-standing data inconsistencies to ensure that obligation data reported by the Defense Finance and Accounting Service match obligation data reported by the Navy and the Marine Corps.

    Agency Affected: Department of Defense

 

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