Future Years Defense Program:

DOD's 1998 Plan Has Substantial Risk in Execution

NSIAD-98-26: Published: Oct 23, 1997. Publicly Released: Oct 23, 1997.

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Pursuant to a congressional request, GAO compared the Department of Defense's (DOD) fiscal year (FY) 1998 Future Years Defense Program (FYDP) with the FYDP for FY 1997, focusing on: (1) how major programs were adjusted from the 1997 FYDP to the 1998 FYDP; (2) how these adjustments may affect programs in the future; and (3) proposed Quadrennial Defense Review (QDR) initiatives that may have been taken by the the committees on authorization and appropriations during their reviews of the FY 1998 defense budget request.

GAO noted: (1) its comparison of the 4 years common to both DOD's FY 1998 FYDP and FY 1997 FYDP (1998-2001) shows that funding for military personnel, operation and maintenance, and research, development, test, and evaluation is projected to be higher, and funding for procurement is projected to be lower than anticipated 1 year ago; (2) for the fourth straight budget year since 1995, DOD has not met its procurement goals established in pervious FYDPs; (3) the 1998 FYDP retains substantial risk that DOD's program will not be executed as planned; (4) although the 1998 FYDP projects that a smaller percentage of DOD's total budget will be needed to pay for infrastructure activities than that projected in the 1997 FYDP, DOD's projections are questionable; (5) for example, the 1998 FYDP projects billions of dollars in savings due to management initiatives, but DOD does not have details on how all the savings will be achieved; (6) also, DOD projects no real growth in the cost of the Defense Health Program during 1998-2001, whereas this program increased 73 percent in real terms during 1985-96; (7) another reason GAO believes the 1998 FYDP poses risks is that the estimates for procurement spending, in relation to DOD's total budget and its operation and maintenance projections, run counter to DOD's experience over the last 30 years; (8) DOD acknowledged in its May 1997 Report of the QDR that the 1998 FYDP includes substantial financial risk; (9) the Secretary has stated that absent any further changes, the fiscal patterns and assumptions embedded in the 1998 FYDP are most likely not going to free up sufficient funds to achieve DOD's modernization goals; (10) according to DOD, compared to the 1998 FYDP, the QDR proposes a more balanced, modern, and capable defense program that can be achieved within currently proposed budgets; (11) to accomplish its goals, DOD proposes that it reduce personnel, make some modest changes in force structure, realize additional infrastructure saving through fundamental reforms and base realignments and closures, and continue to improve its business operations; (12) the success of these initiatives will require discipline, execution, and aggressive follow-through on the part of DOD management; and (13) on some important initiatives, such as base closures and military personnel reductions, DOD will need congressional approval.

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