Pursuant to a legislative requirement, GAO reviewed: (1) the Department of Defense's (DOD) efforts to combine Sea-Based Aerostat (SBA) and Small Aerostat Surveillance System (SASS) missions in the Caribbean; and (2) DOD use of fiscal year 1992 appropriatied funds for the maintenance of SBA ships for purposes not authorized by Congress.

GAO found that: (1) DOD took operational control of the five Coast Guard SBA ships in December 1991 and combined SBA and SASS counterdrug missions in the Caribbean in January 1992; (2) DOD spent $4.5 million to operate the third SASS ship even though the congressional conferees declined to fund the project; (3) DOD did not process the funding transaction as a reprogramming action as required by DOD regulations; and (4) the Army project office obligated funds and signed a contract without a valid funding authorization document.