Future Years Defense Program:

Optimistic Estimates Lead To Billions in Overprogramming

NSIAD-94-210: Published: Jul 29, 1994. Publicly Released: Aug 1, 1994.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) Future Years Defense Program (FYDP), focusing on: (1) major funding assumptions underlying FYDP; and (2) FYDP compliance with statutory requirements.

GAO found that: (1) FYDP overprogramming could exceed $150 billion and does not comply with the presidential budget submission; (2) the current FYDP exceeds the Administration's fiscal year (FY) 1995 budget submission by $21.6 billion due to undistributed future adjustments which are recorded in FYDP as negative accounting entries; (3) although DOD believes that the adjustments reflect only changes in inflation indices, the Congressional Budget Office believes they are indicative of other funding problems; (4) DOD is reluctant to make tough program decisions and trade-offs; (5) DOD use of the negative accounting entries to offset overprogramming costs is not consistent with congressional intent; (6) DOD has substantially overestimated future savings from base closings and management initiatives and underestimated costs for weapon systems development and procurement, environmental remediation, pay raises, and peacekeeping operations; and (7) DOD has historically used overoptimistic planning assumptions which have resulted in program instability, delays, and terminations.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress did not take action on this matter in 1995 and DOD did not use negative accounting entries in 1996.

    Matter: Congress may wish to consider enacting legislation that would explicitly prohibit DOD from using negative adjustments for unspecified programs as substitutes for resource decisions necessary to bring programs, projects, and activities into conformance with the President's budget. Such a provision need not preclude the use of legitimate negative accounting adjustments such as offsetting receipts and foreign currency fluctuations.


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