Defense Modernization Account:

Operations and Benefits

NSIAD-99-134: Published: Jun 11, 1999. Publicly Released: Jun 11, 1999.

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Pursuant to a legislative requirement, GAO provided information on the operations and benefits of the Department of Defense's (DOD) Defense Modernization Account, focusing on: (1) the status of funding and uses of the account; and (2) whether DOD has reported to the six congressional committees on the activities of the account as required by the National Defense Authorization Act for Fiscal Year 1996.

GAO noted that: (1) neither DOD nor the services have ever transferred funds into the Defense Modernization Account, and hence it has never been used; (2) the services maintained that the reason for the inactivity in the account is that funds have not been available; (3) in fact, the legislation prohibits the transfer of funds to the account if the secretary of a military department or the Secretary of Defense determines that there are greater priorities for the use of funds; (4) according to the Air Force, it uses available funds for other purposes such as reprogrammings or as offsets to congressionally directed rescissions; (5) the Marine Corps stated that it does not have excess funds in support of installations, facilities, or procurement; (6) the Navy emphasized the lack of availability of funds to use for the account; (7) the Army stated that it has not been able to afford transfers to the account because of tight budgets, readiness priorities, and support for contingency operations not always completely reimbursed by supplemental appropriations; (8) GAO also found that DOD has never submitted any of the required quarterly reports on the activities of the account to the specified congressional committees; (9) according to DOD, the reason reports have not been submitted is that the account has been inactive; and (10) nevertheless, had DOD submitted reports, the committees would have been informed that the account has been inactive.

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