Future Years Defense Program

Optimistic Estimates Lead To Billions in Overprogramming Gao ID: NSIAD-94-210 July 29, 1994

By overestimating savings and understating costs, the Pentagon has included in its Future Years Defense Program more programs than spending plans can support--more than $150 billion in overprogramming from the fiscal year 1995-99 period, according to GAO estimates. The Defense Department's (DOD) current Future Years Defense Program is overprogrammed by about $20 billion when compared with the Administration's fiscal year 1995 budget submissions. GAO found another $1.5 billion in negative adjustments in the research and development account. GAO believes that it is inconsistent with congressional intent for DOD to use negative adjustments to unspecified programs to balance Future Years Defense Program funding estimated with those in the President's budget. This overprogramming is not new. Since 1984, GAO has consistently disclosed that DOD employs a systemic bias toward overly optimistic planning. The use of optimistic planning assumptions has led to program instability, costly program stretch-outs, and program terminations.

GAO found that: (1) FYDP overprogramming could exceed $150 billion and does not comply with the presidential budget submission; (2) the current FYDP exceeds the Administration's fiscal year (FY) 1995 budget submission by $21.6 billion due to undistributed future adjustments which are recorded in FYDP as negative accounting entries; (3) although DOD believes that the adjustments reflect only changes in inflation indices, the Congressional Budget Office believes they are indicative of other funding problems; (4) DOD is reluctant to make tough program decisions and trade-offs; (5) DOD use of the negative accounting entries to offset overprogramming costs is not consistent with congressional intent; (6) DOD has substantially overestimated future savings from base closings and management initiatives and underestimated costs for weapon systems development and procurement, environmental remediation, pay raises, and peacekeeping operations; and (7) DOD has historically used overoptimistic planning assumptions which have resulted in program instability, delays, and terminations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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