Defense Inflation Budgeting

GAO testified on the Department of Defense's (DOD) budgeting for inflation. GAO noted that: (1) DOD budgeted more than it needed for fiscal years (FY) 1982 through 1986; (2) most of the excess funds were spent on additional defense programs; (3) some of the excess funds may remain unobligated since DOD did not meet its obligation plans; (4) 65 percent of the inflation occurred in procurement accounts for major weapon systems; (5) it could not determine the amount of excess funds available; (6) Congress adjusted budget requests for FY 1982 through FY 1986; and (7) DOD budget estimates for FY 1986 and FY 1987 more closely reflect the actual figures than previous-year estimates. GAO believes that: (1) the DOD financial management system needs reform; and (2) proposed legislation would correct the immediate financial management problem with DOD inflation funding.