Department of Defense's Claimed Savings From Economy and Efficiency Program

Testimony was given concerning the Department of Defense's (DOD) Economy and Efficiency Program and present budget estimates that DOD will use to reduce its total obligational authority by $51.4 billion between fiscal years 1981 and 1987. GAO examined savings claimed under this program and reported that: (1) substantial savings are possible if the reforms are implemented as planned; (2) the claimed savings are based on preliminary budget estimates and must be considered tentative; and (3) no formal system exists for tracking the savings which have actually been achieved. GAO agreed to monitor DOD actions to determine whether the projected savings could be expected to accrue, whether the savings projected for fiscal years 1981 and 1982 were realized, and whether the projected savings will result from actions which DOD initiated. GAO selected a sample of key reforms to review which covered about $40.7 billion of the $52.4 billion in projected savings. About 27 percent of the projected savings in the sample were adequately supported and the remaining 73 percent were considered questionable or not supported. In addition, of the total projected savings, 52 percent are to result from actions not initiated by DOD. Further, GAO stated that there is a strong possibility that the major portion of these savings in its package will not be realized. Therefore, unless DOD can achieve comparable savings in other areas, the DOD outyear budgets have been understated significantly, which means that DOD must request additional obligational authority in future budgets or eliminate or reduce the funding for programs currently planned.