DOD Budget

In February 1993, the Secretary of Defense convened a Defense Science Board task force to review the fiscal years 1994-99 Future Years Defense Program (FYDP) that the Pentagon had prepared in late 1992 and to determine the validity of the plan's funding assumptions. The task force was asked to assess the (1) savings from the Defense Management Review Decisions; (2) development and acquisition costs for weapon systems under development, including any potential procurement "bow wave" beyond fiscal year 1999; (3) operation and maintenance funding levels to support the planned force structure and projected personnel levels; (4) environmental cleanup and compliance costs; and (5) defense health care costs. Overall, the task force estimated a shortfall for the 1994-99 FYDP in the range of $20 billion to $26.5 billion. This report evaluated the reasonableness of the task force's findings and recommendations.

GAO found that: (1) the task force's estimated savings from defense management report decisions (DMRD) could be overstated by $9 billion to $11 billion; (2) the funding shortfalls are a result of delayed DMRD implementation plans and unreasonable cost savings estimates; (3) the services and defense agencies could absorb some funding shortfalls without affecting their combat readiness; (4) the task force's estimated funding shortfall for weapons systems acquisition could be unreasonably low because the Department of Defense (DOD) has overstated the effectiveness of its cost control initiatives and has historically experienced cost overruns and project delays; (5) the task force may have substantially underestimated environmental cleanup and compliance costs because future cost increases could not be quantified; (6) DOD environmentally-related shortfalls could range between $5.1 billion to about $8.8 billion; (7) the task force's defense health care shortfall estimate was not reliable because the methodology used to calculate the shortfall was unclear; (8) the task force's estimated shortfall for operation and maintenance costs could be significantly understated because future projected savings are overly optimistic; and (9) although DOD agrees with most of the task force's findings, there are several areas that need correction or clarification.