National Defense:

U.S. Participation in the NATO Infrastructure Program

ID-83-3: Published: Jan 27, 1983. Publicly Released: Jan 27, 1983.

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GAO examined aspects of the North Atlantic Treaty Organization's (NATO) infrastructure, which is its commonly funded military construction program, to: (1) answer some frequently asked questions about how the program works; (2) identify actions to improve the future recovery from NATO of funds spent by the United States on prefinanced projects; and (3) suggest how savings could be achieved by the Department of Defense (DOD) through better cash management over U.S. payments to the infrastructure program.

The NATO infrastructure program provides funds for building essential operational facilities in support of the alliance's military forces. The United States uses military construction appropriations to prefinance projects for reimbursement by NATO and, to date, the military services have recouped only about 38 percent of the total amount prefinanced. The NATO infrastructure program is experiencing funding shortfalls and does not have sufficient funds to finance many projects which have already been approved. The U.S. military commanders charged with increasing conventional warfare capability often are unable to obtain funding for their NATO-eligible projects through the infrastructure program. GAO identified two possible courses of action when the infrastructure program is unable to accommodate critical construction projects vital to U.S. security interests: (1) the creation of a separate funding mechanism for prefinancing called a rolling fund; and (2) the expansion of the U.S. European Command's role in the selection of projects to be prefinanced. Infrastructure program expenditures are expected to increase in the next few years, and GAO believes that changing from a quarterly to a monthly schedule of payments to the program could result in considerable savings to the United States.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: In considering the 1984 Military Construction Budget Request for the NATO Infrastructure, the House and Senate Conferences required the Secretary of Defense to prepare a report on how to improve the recoupment record but did not require that he implement a system like a rolling fund.

    Matter: Congress should consider, in debating prefinancing decisions, whether a system like the rolling fund would meet congressional mandates for improving DOD performance in recovering funds from NATO for prefinancing projects. Specific authorizing legislation would be needed to implement such a system.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD disagreed with the recommendation to develop a system like a rolling fund before requesting additional prefinancing of NATO projects. Prefinancing funds were requested in the fiscal year 1984 budget submission.

    Recommendation: The Secretary of Defense should, before requesting any additional prefinancing for NATO-eligible construction projects, develop and propose a system like the rolling fund. Such a system should be designed to provide greater incentive to the military services to recoup funds from NATO. The system should also include greater participation by the U.S. European Command in the selection of projects for prefinancing.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD and the Department of State do not believe that it would be useful to change the timing of U.S. payments to NATO.

    Recommendation: The Secretary of State, in conjunction with the Secretary of Defense, should ask the U.S. Mission to NATO to pursue the feasibility with NATO authorities of changing the current schedule of U.S. payments and to prepare a report on its findings. Until NATO adopts a more precise payment criteria and unless it can be demonstrated that a monthly schedule of U.S. payments will have an adverse impact on NATO program implementation, GAO believes that a monthly payment schedule should be used. Existing payment procedures should be modified to reflect this change.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD and the Department of State do not believe that it would be useful to change the timing of U.S. payments to NATO.

    Recommendation: The Secretary of State, in conjunction with the Secretary of Defense, should ask the U.S. Mission to NATO to pursue the feasibility with NATO authorities of changing the current schedule of U.S. payments and to prepare a report on its findings. Until NATO adopts a more precise payment criteria and unless it can be demonstrated that a monthly schedule of U.S. payments will have an adverse impact on NATO program implementation, GAO believes that a monthly payment schedule should be used. Existing payment procedures should be modified to reflect this change.

    Agency Affected: Department of Defense

 

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