Recommendations for Executive Action

1. Status: Open

   Comments: In DOD's response to a draft of our report, DOD concurred with our recommendation and stated it planned to propose updated criteria to OMB to reflect current and evolving threats and reflect any changes in OCO policy under the new Administration. In October 2017, a DOD official stated that the department has discussed possible modifications to the criteria with the military departments and combatant commands, but had not made any formal recommendations to the OMB to revise the criteria. In May 2020, DOD officials stated they had re-evaluated the criteria, and were considering modifications that would take into account mission, instead of location, but OMB did not accept the modifications. The National Defense Authorization Act for Fiscal Year 2018 included a provision requiring DOD and OMB to update their OCO criteria by September 2018. As of May 2020, neither DOD nor OMB has issued updated criteria, and DOD had not made any updates to Volume 12, Chapter 23 of its Financial Management Regulation that governs contingency operations to reflect updated criteria.

   Recommendation: To provide additional information for congressional decision makers regarding DOD's budget, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller), in consultation with the OMB, to reevaluate and revise the criteria for determining what can be included in DOD's OCO budget requests to reflect current OCO-related activities and relevant budget policy directing in which budget requests OCO funds may be included.

   Agency Affected: Department of Defense

2. Status: Closed - Implemented

   Comments: In its response to our draft report, DOD partially concurred with our recommendation and commented that developing reliable estimates is an important first step in any future effort to transition these costs to the base budget. However, DOD stated that until there is relief from the budgetary caps established by the Budget Control Act of 2011, DOD would need overseas contingency operations funds to finance counterterrorism operations, such as Operation Freedom's Sentinel and Operation Inherent Resolve.. In May 2018, DOD provided information indicating it was taking steps to implement this recommendation. For example, the department told us it had received direction from the Office of Management and Budget (OMB) to develop a plan for the fiscal year 2020 President's Budget to shift the enduring costs in the OCO budget to the base budget on a one-for-one basis, reducing the size of OCO while staying within the same DOD topline. According to DOD, the remaining OCO budget will fund only those costs directly associated with combat operations. In its budget justification materials for fiscal year 2019, DOD estimated the funds that would be shifted from the overseas contingency operations to the base budget request ranged from $53.0 billion to $45.8 billion from fiscal years 2020 through 2023.

   Recommendation: To assist decision makers in formulating DOD's future budgets, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to develop a complete and reliable estimate of DOD's enduring OCO costs and to report these costs in concert with the department's future budget requests, and to use the estimate as a foundation for any future efforts to transition enduring costs to DOD's base budget.

   Agency Affected: Department of Defense

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