Defense Budget:

Fiscal Year 2000 Contingency Operations Costs and Funding

NSIAD-00-168: Published: Jun 6, 2000. Publicly Released: Jun 6, 2000.

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Pursuant to a congressional request, GAO provided information on Department of Defense's (DOD) contingency operations costs and funding for fiscal year (FY) 2000, focusing on: (1) how DOD components identify incremental costs in support of contingency operations; and (2) the need for, and average cost of, mission rehearsal exercises conducted by the Army in preparation for contingency deployments.

GAO noted that: (1) DOD estimates all ongoing contingency operations in FY 2000 will cost $4.7 billion, with operations in the Balkans and Southwest Asia accounting for over 99 percent of that total; (2) to date, DOD has received about $2.65 billion for FY 2000 contingency operations; (3) Congress appropriated $396 million directly to the services' military personnel accounts; (4) the remaining $2.3 billion came from the Overseas Contingency Operations Transfer Fund, which Congress created to provide funding to DOD components for contingency costs; (5) in February 2000, the President submitted a request for an emergency supplemental appropriation of about $2.05 billion for contingency operations in Kosovo and East Timor for FY 2000; (6) the supplemental request is pending; (7) nevertheless, if the supplemental is not enacted, Army officials report that they will have to reduce overall operation and maintenance spending in late July to cover the shortfall in contingency operations costs; (8) the Air Force and the Navy's Atlantic and Pacific Fleets use different methodologies to calculate their costs for flying hours in support of contingencies; (9) the DOD regulation on contingency operations costs permits different methodologies, but this practice results in different rates of reimbursement for similar levels of activity; (10) the Air Force is seeking $47.2 million in the supplemental appropriation request to repair or restore infrastructure used during contingency operations in Kosovo; (11) no other service is seeking similar reimbursement in the budget request; (12) DOD's regulation does not provide for whether maintenance of home station infrastructure can be an allowable incremental cost; (13) however, DOD officials believe that some home station costs may be attributable to contingency operations and plan to revise the regulation; and (14) exercise costs, which average about $9-$15 million are offset against the costs that would have been incurred for other exercises or training that the units had scheduled before deployment was tasked but which were cancelled or modified due to the deployment.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Navy has developed and implemented a common methodology for calculating flying hours.

    Recommendation: To ensure consistency in estimating and reporting incremental contingency operations costs, the Secretary of Defense should determine whether a common methodology for developing incremental flying hour costs is feasible, and, if so, revise the regulation on contingency operations to reflect that methodology. At a minimum, the Secretary of Defense should direct the Secretary of the Navy to develop and apply a single methodology for determining the incremental flying hours within the Navy.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD has revised its regulation and credits GAO's report with being the catalyst for identifying the need for clarification in this area. In addition, it has denied $47.2 million in fiscal year 2000 infrastructure repair costs claimed by the Air Force.

    Recommendation: Because the regulation on contingency operations does not provide for wear and tear on infrastructure and related facilities at home stations as a contingency operation cost, the Secretary of Defense should modify the regulation to specifically state circumstances under which home station infrastructure wear and tear is allowable as a contingency operation cost.

    Agency Affected: Department of Defense


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