Morale, Welfare, and Recreation:

Declining Funds Require DOD to Take Action

NSIAD-94-120: Published: Feb 28, 1994. Publicly Released: Feb 28, 1994.

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David R. Warren
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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) morale, welfare, and recreation (MWR) program's adaptation to reductions in military force structure, budgets, and bases, focusing on: (1) MWR financial status; (2) the problems facing the program's management; and (3) actions DOD is taking or contemplating to improve the program's operation.

GAO found that: (1) MWR activities other than the exchanges do not produce enough revenue to cover their expenses; (2) appropriated funds are expected to decline as overall budgets decline; (3) declining financial conditions are likely to force reductions in the services the program provides; (4) the decentralized approach to managing the MWR program may not be well-suited to the receding patronage and funding the program now faces; (5) because individual commanders have discretion in allocating money at the installation level, funds from different sources become mixed; (6) if MWR programs are not managed carefully, the funds could be spent by installations in a way that incurs future costs and worsens finances in the long run; (7) the MWR program is too fragmented and needs to be consolidated; (8) a strategic review of the MWR program has not produced the results that DOD hoped for; and (9) significant changes in the program are necessary to improve efficiency.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A DOD report to Congress dated May 1995 outlines plans to maximize the use of decreasing MWR funds. An initiative is also under way to reorganize and update all MWR directives and instructions to support evolving MWR programs. DOD is developing a long-range resource management plan that will assess trends in MWR programs, to include resourcing requirements, the viability of each program, and construction plans.

    Recommendation: The Secretary of Defense should establish milestones for the completion of the strategic MWR review and the implementing guidance to: (1) improve the management and oversight of the MWR program; and (2) ensure that the services have sound management strategies that anticipate the likelihood that MWR funding will decline faster than costs.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In March 1994, the Army MWR Board of Directors tasked Army major commands to review all unawarded nonappropriated funds for major construction projects to determine if they were still valid. The review included return on investment (internal rate of return and net present value) and appropriated funds required in support of projects. Projects that do not expect positive return on investment or that require substantial or additional appropriated funds require full justification before proceeding. The Army completed the review in May 1994 and has now revalidated all unawarded projects.

    Recommendation: The Secretary of the Army should delay the further obligation of funds for MWR capital improvement and construction projects until such projects are shown to be sound investments, affordable, and consistent with the need to be less reliant on appropriated funds in the future.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: The Army has completed its review of unawarded projects and has revalidated construction plans and made adjustments where warranted. Some projects, however, are required for quality-of-life programs that may not result in positive return on investment.

    Recommendation: To the extent that capital improvement and construction projects do not prove to be the best use of funds, the Secretary of the Army should redirect the funds to efforts that will increase MWR profits or lower MWR expenses.

    Agency Affected: Department of Defense: Department of the Army


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