Defense Cost and Funding Issues
NSIAD-96-121BR, Mar 15, 1996
Pursuant to a congressional request, GAO provided information on the costs of Department of Defense (DOD) contingency operations in fiscal year (FY) 1995, focusing on the: (1) extent to which an emergency supplemental appropriation covered those costs; (2) impact of funding shortages or overages on the services; and (3) accuracy of DOD and service methods for estimating such costs.
GAO found that: (1) DOD and the services reported about $2.223 billion in contingency operations costs for FY 1995, primarily for operations in southwest Asia, Haiti, Cuba, and the former Yugoslavia; (2) the reported costs were $12 million less than the amount Congress provided through an emergency supplemental appropriation of $2.235 billion; (3) the Army and the Navy had to absorb their respective $75-million and $34-million shortfalls between what Congress provided and their actual costs by making reductions in other areas; (4) other DOD agencies collectively reported a shortfall of about $3 million; (5) the Marine Corps and the Air Force spent their respective $15 million and $110 million in excess funding on facility repairs, maintenance, and improvements; (6) reported costs of contingency operations surged in September 1995 to about four times more than the previous month's costs; (7) estimating costs of contingency operations is difficult because it involves making assumptions about such factors as force requirements, operation duration, logistical operations, and costs; and (8) although DOD and the services can make some improvements to their models for developing costs of potential force structure changes to aid them in estimating the costs of contingency operations, such estimations will continue to be inexact and require adjustments.
- Closed - implemented
- Closed - not implemented
Matters for Congressional Consideration
Matter: If Congress does not want emergency supplemental funds authorized and appropriated for contingency operations to be spent for other purposes, it may want to clearly specify in supplemental appropriation legislation that supplemental funds provided for contingency operations may only be used for the: (1) expenses incurred in support of contingency operations; and (2) reimbursement of accounts initially utilized to conduct those operations.
Status: Closed - Implemented
Comments: Congress has established an Overseas Contingency Operations Transfer Fund, which places funding for expenses related to overseas contingency operations in a transfer fund that the Secretary of Defense may transfer to the services. This allows the Secretary to provide funds as operations unfold during the year.
Matter: In instances where initial funding proves to be inadequate and Congress considers providing further funding, it may wish to require DOD to reprogram or transfer excess funds among the services if some services have costs below their funded level while others have costs above it before providing additional funds.
Status: Closed - Implemented
Comments: DOD, in an April 1996 reprogramming action, reduced their reprogramming request by $62.2 million. DOD did this by redistributing excess funds from various military personnel and operations and maintenance appropriation accounts that had been previously earmarked for certain contingencies.