Defense Budget and Program Issues in the Fiscal Year 1991 Budget

Gao ID: T-NSIAD-90-18 March 1, 1990

GAO discussed current deficit-reduction issues, focusing on projected cuts in defense spending arising from improved relations with the Soviet Union. GAO noted that: (1) the government's use of surplus federal trust funds to pay current operating expenses was masking the magnitude of the national debt, which would reach an estimated $4.5 trillion by 1995; (2) the Department of Defense (DOD) had not completed its 1990 through 1994 reductions for use in preparing a new 5-year defense program, thereby limiting congressional budgeting decisions; (3) 20 DOD weapons systems programs scheduled for termination in 1991 accounted for about $3 billion in the year's defense reductions; (4) DOD needed to assess its strategy of concurrent production and testing for major weapons systems to avoid costly design changes; (5) DOD halted development efforts on three out of eight automated information systems after spending $330 million; (6) DOD submitted budgets to Congress which understated costs for automated systems, since it was not maintaining accurate and complete cost information; (7) a recent DOD management report projected savings for fiscal years 1991 through 1995 totaling $39 billion, with $2.3 billion of those savings were in the 1991 budget; (8) the Air Force's financial systems were not producing accurate cost data; (9) DOD inventories exceeded operating requirements by $103 billion and unreliable inventory records made the system vulnerable to fraud and abuse; and (10) DOD was acquiring major weapons systems that exceeded initial cost estimates and did not have the promised capabilities.

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