Global War on Terrorism: DOD Needs to Take Action to Encourage Fiscal Discipline and Optimize the Use of Tools Intended to Improve GWOT Cost Reporting

In November 2009, the Defense Finance and Accounting Service (DFAS) issued Standard Operating Procedures for Contingency Operations Data Validation, Version 2. According to DOD, the procedures require DFAS to review the Components' variance explanations to ensure that the explanations are complete and reasonable, summarize and consolidate the footnote explanations and prepare a package for review by OUSD, Comptroller and senior leadership of DFAS. These actions essentially meet the intent of the recommendation.

According to DOD, as a result of the Variance Analysis/Affirmation Workgroup, the variance analysis methodology was changed in January 2008 to allow analysis based on a monthly spend plan or a 12-month average.

According to DOD in August 2008, the Defense Finance and Accounting Service developed an affirmation checklist, which provides criteria for affirmation, to assist the components in completing their affirmation.

DOD agreed with our recommendation and stated efforts are underway to improve cost of war reporting and variance analysis and affirmation processes. According to DOD, the Defense Finance and Accounting Service developed an affirmation checklist, which provides criteria for affirmation, to assist the components in completing their affirmation. Additionally, the Under Secretary of Defense (Comptroller) issued revised instructions for contingency operations cost report footnotes to require Components to explain all sources and variable amounts used to identify and report cost data if the data source is other than the official accounting systems and/or any adjustments made to data originating from the official accounting records. These actions essentially meet the intent of the recommendation.

According to DOD in June 2008, DOD has implemented a compliance scorecard to track compliance with submitting costs, variance analysis explanations, and affirmation statements and the Under Secretary of Defense (Comptroller) issued a memorandum with revised guidance regarding Cost-of-War footnotes.

According to DOD in 2008, the Defense Finance and Accounting Service uses a spreadsheet to monitor late and missing explanations and monitors missing explanations until they are received and identifies missing explanations or affirmations when the draft is submitted to the Under Secretary of Defense (Comptroller). If late explanations or affirmations are received before the release of the report, they are immediately provided so they can be included in the final report. These actions meet the intent of the recommendation.

The Administration, in the publication "A New Era of Responsibility," stated that the fiscal year 2010 budget would transparently present the full costs of the defense base budget and the incremental costs of ongoing operations in Iraq and Afghanistan. In addition, the Department of Defense (DOD) and the Office of Management and Budget collaboratively developed the February 26, 2009, Criteria for War/Overseas Contingency Operations Funding Requests. That criteria defines the items appropriately funded in the base budget and the items appropriately funded in the Overseas Contingency Operations budget. Items such as family support initiatives and recruiting and retention bonuses are included in the base budget. This criteria was first applied to DOD's Fiscal Year 2010 budget request, which was submitted to Congress in May 2009.

The Administration, in the publication "A New Era of Responsibility," stated that the fiscal year 2010 budget would transparently present the full costs of the defense base budget and the incremental costs of ongoing operations in Iraq and Afghanistan. In addition, the Department of Defense (DOD) and the Office of Management and Budget collaboratively developed the February 26, 2009, Criteria for War/Overseas Contingency Operations Funding Requests. That criteria defines the items appropriately funded in the base budget and the items appropriately funded in the Overseas Contingency Operations budget. Items such as family support initiatives and recruiting and retention bonuses are included in the base budget. This criteria was first applied to DOD's Fiscal Year 2010 budget request, which was submitted to Congress in May 2009.

In its comments, DOD stated that the Secretary of Defense does not make the determination concerning use of emergency funding request; the Office of Management and Budget makes that determination. In early 2009, the Department of Defense (DOD) and the Office of Management and Budget collaboratively developed criteria for deciding whether funding properly belongs in DOD's base budget or the budget for Overseas Contingency Operations. These criteria were first applied to DOD's Fiscal Year 2010 budget request. As a result, about $7.8 billion in funding was shifted from DOD's OCO budget request to its base budget request, while its OCO request was reduced by another $670 million. The criteria were subsequently updated in September 2010, and DOD indicated it would incorporate the criteria into its financial management regulation. In December 2017, DOD updated the DOD Financial Management Regulation 7000.14, Volume 12, Chapter 23: Contingency Operations, to reference these criteria. By referencing these criteria in its financial management regulation, which also covers the procedures for estimating contingency operations budgets, DOD strengthens its process for ensuring war funding requests are limited to truly unforeseen or sudden events.

Revised procedures for contingency operation cost report footnotes were issued by Office of the USD(C) on 4 Jan 2008, and distributed to DOD components by the GWOT Cost of War Program Management Office on 8 Jan 2008.

The Defense Finance and Accounting Service (DFAS) has taken steps to improve the Global War on Terrorism Cost of War footnote compilation process. As such, according to DOD, DFAS sends each component their portion of the draft footnotes for review prior to the office of the Under Secretary of Defense (Comptroller) releasing the monthly report. The Department has established a performance measure to track compliance with prescribed footnote requirements.