Defense Budget: Need to Strengthen Guidance and Oversight of Contingency Operation Costs

Highlights

The incremental costs for overseas military contingency operations, which include the enforcement of no-fly zones, humanitarian assistance, and peace enforcement, totaled more than $29 billion since 1991. Most of these costs were incurred in the Balkans and Southwest Asia. The Department of Defense (DOD) defines incremental costs as those above and beyond baseline training, operations, and personnel costs. Although most contingency operations expenditures GAO reviewed were appropriate, as much as $101 million was spent on questionable items, including cappuccino machines, golf memberships, and decorator furniture. Limited guidance and oversight, combined with a lack of cost consciousness, contributed to the questionable expenditures.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	To provide better guidance regarding the use of contingency funds, the Secretary of Defense should expand DOD's financial management regulation (vol. 12, ch. 23) to include more comprehensive guidance governing the use of funds appropriated for contingency operations. At a minimum more complete guidance should detail examples of what contingency funds can and cannot be used to purchase.	Closed – Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and said that its financial management regulation is being updated to address the recommendation.
Department of Defense	To provide better guidance regarding the use of contingency funds, the Secretary of Defense should expand DOD's financial management regulation (vol. 12, ch. 23) to include more comprehensive guidance governing the use of funds appropriated for contingency operations. At a minimum more complete guidance should detail what units should do with equipment procured with contingency funds when the equipment is no longer needed by the unit to support the mission, that is, guidance for the disposition of equipment to include what items can be stored at a central location for use by other deploying units, transferred directly to other units, or retained by the unit.	Closed – Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and said that its financial management regulation is being updated to address the recommendation.
Department of Defense	To provide better guidance regarding the use of contingency funds, the Secretary of Defense should expand DOD's financial management regulation (vol. 12, ch. 23) to include more comprehensive guidance governing the use of funds appropriated for contingency operations. At a minimum more complete guidance should detail the importance of cost consciousness and proper stewardship in the use of contingency funds.	Closed – Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and said that its financial management regulation is being updated to address the recommendation.
Department of Defense	To improve oversight of the expenditures of contingency funds, the Secretary of Defense should conduct periodic reviews of expenditures in support of contingency operations. Specific review areas should include (1) an analysis of the need for items purchased to support pre-deployment training, (2) a comparison of items purchased by various units to identify opportunities for sharing arrangements or the need for centralized procurement, (3) the reasonableness of items purchased during all phases of the contingency operation to include a review of purchases made with government credit cards, and (4) an assessment of whether items purchased with contingency funds are properly accounted for and handled once the contingency mission is completed.	Closed – Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and said that the Office of Secretary of Defense (Comptroller) will monitor expenditures in support of contingency operations biannually.
Department of Defense	To improve oversight of the expenditures of contingency funds, the Secretary of Defense should direct all components of DOD to forward to the executive agent for operations in a geographical area such as the Balkans a copy of all existing and future contracts and modifications to those contracts that directly support U.S. operations and that the executive agent for that area review all contracts to (1) identify possible duplication of services and (2) ensure that contractors receive only those services from the government to which they are contractually entitled.	Closed – Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and said that its financial management regulation is being updated to address the recommendation.
Department of Defense	To improve oversight of the expenditures of contingency funds, the Secretary of Defense should direct the Secretary of the Army to require Army National Guard units to submit detailed lists of expenditures in support of requests for reimbursement of costs claimed in support of contingency operations.	Closed – Not Implemented In commenting on a draft of GAO's report, DOD agreed with the recommendation, and stated that the Army plans to require National Guard units to provide detailed lists of expenditures in support of requests for reimbursement of costs claimed for contingency operations.
Department of Defense	To minimize the number of repetitive and questionable purchases, the Secretary of Defense should direct the Secretary of the Army to discontinue the practice of allowing individual units to purchase all items needed for training during the pre-deployment phase of a contingency operation. Instead, several training sets consisting of items needed for training should be assembled and controlled by a single Army entity such as the Training and Doctrine Command. These sets could be issued in support of the training, returned for inspection and repair when the unit deploys, and then reissued to subsequent units preparing for deployment.	Closed – Implemented In its response to GAO's final report, DOD agreed with the recommendation and said that it is beginning preliminary feasibility studies in the development of policies and procedures to implement a single entity concept.
Department of Defense	To minimize the number of repetitive and questionable purchases, the Secretary of Defense should direct the Secretary of the Army to require the National Guard Bureau to assemble and control equipment training sets purchased with contingency funds for its units. The Bureau should also establish video conferencing sets to be rotated among the states for use when its units are deployed.	Closed – Implemented In its response to GAO's final report, DOD agreed with the recommendation and said that it is beginning preliminary feasibility studies in the development of policies and procedures to implement a single entity concept.
Department of Defense	To minimize the number of repetitive and questionable purchases, the Secretary of Defense should direct the Secretaries of the Army and the Air Force to require that major commands designate a single entity to procure all items required by rotating units while deployed to a contingency base or camp, except for individual- and unit-owned items.	Closed – Implemented In its response to GAO's final report, DOD agreed with the recommendation and stated that it will begin preliminary feasibility studies in the development of policies and procedures to implement a single entity concept.

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Budget and Spending

Armed forces abroadDefense budgetsDefense contingency planningDefense cost controlContingency operationsDefense operationsInternal controlsMilitary cost controlMilitary operationsU.S. Army