Defense Budget:

Projected Inflation Savings

NSIAD-98-177R: Published: May 11, 1998. Publicly Released: May 11, 1998.

Additional Materials:

Contact:

Richard Davis
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) projected inflation savings, focusing on: (1) identifying the projected savings by fiscal year and the programs that DOD plans to buy with those savings; (2) the implications of applying those projected savings to additional DOD programs; and (3) a comparison of DOD's estimated savings to estimates provided by the Congressional Budget Office (CBO) and identify possible reasons for the difference in those estimates.

GAO noted that: (1) as a result of lower projected inflation rates, DOD calculated that its future purchases of goods and services over the 1999-2003 period would cost about $21.3 billion less than projected 1 year ago; (2) according to DOD, it will be able to buy additional programs with assumed savings from the projected lower inflation; (3) these programs include procurement items and civilian and military pay raises, which account for $15 billion of the $21.3 billion; (4) GAO's reviews of DOD's Future Years Defense Programs (FYDP) over the past few years have shown that DOD has not been able to reduce its infrastructure and increase procurements as planned; (5) this problem can be attributed somewhat to optimistic projections of future savings that did not materialize; (6) if the projected inflation savings that DOD has factored into the 1999 FYDP materialize or the inflation rates fall even lower than projected, DOD can fund the additional programs; (7) however, if the projected rates prove to be too optimistic, and the savings do not materialize, DOD will have to adjust its future budgets by cutting programs and/or request additional budget authority from the President and Congress; (8) CBO estimated that lower projected inflation rates would save defense $13.4 billion over the 1999-2003 period rather than the $21.3 billion estimated by DOD; (9) the most significant reason DOD's and CBO's estimates differ is that the declines in projected inflation are different; and (10) other reasons are that the budget baselines are different and CBO's estimate includes savings from low fuel costs, whereas DOD's estimate of $21.3 billion does not include savings for lower fuel costs of about $1 billion.

Sep 22, 2016

Sep 21, 2016

Sep 19, 2016

Sep 12, 2016

Sep 8, 2016

Sep 7, 2016

Sep 6, 2016

Aug 25, 2016

Looking for more? Browse all our products here